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Uber faces $26 million fine for breaching Australian Consumer Law

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Uber has been taken to court by the Australian Competition and Consumer Commission (ACCC) after making misleading and deceptive statements regarding ‘Uber Taxi’ fares and cancellation fees. Attwood Marshall Lawyers Commercial Litigation Senior Associate Jade Carlson explains the case, the legal actions taken and the lesson to be learned about what can happen if a business breaches Australian Consumer Law.

Background

The ACCC has launched proceedings in the Federal Court against Uber after completing investigations into the company breaching Australian Consumer Law. Uber has admitted to engaging in misleading or deceptive conduct in the Uber ride-sharing app.

Between December 2017 and September 2021, the Uber rideshare app displayed a warning to more than 2 million consumers who sought to cancel their rides. The warning stated:

“You may be charged a small fee since your driver is already on their way”.

Per Uber’s policies, customers have five minutes from when a driver has accepted a ride to cancel it in order to avoid incurring a cancellation fee. Despite the 5-minute policy, users were shown the warning message whether they met or exceeded the time limitation.

Uber admitted that they may have influenced some users to decide not to cancel their ride after receiving the cancellation warning, despite the fact these customers were entitled to cancel free of charge under Uber’s policy and that the warning did not apply to them.

In September 2021, Uber rephrased its cancellation messaging for Uber services across Australia to: 

“You won’t be charged a cancellation fee” for those users that requested to cancel their ride during the free cancellation timeframe.

The message was displayed for bookings made through UberX, Uber Premier and Uber Comfort services.

In addition to its misleading and deceptive conduct, Uber also acknowledged that the Uber app falsely represented taxi fare prices, which was an additional feature of the app available in Sydney. Uber overinflated the estimated taxi fare cost for the ‘Uber Taxi’ ride option that was available throughout Sydney. This then encouraged consumers to opt for the “cheaper” option and did not allow consumers to make an informed choice about their chosen service.

Uber admitted to failing to monitor the algorithm used to compute the estimated fare range, which inflated these estimates. As a result, the taxi fare was inaccurate and almost always lower than what Uber’s app displayed. The misleading taxi fare estimates were exhibited between June 2018 and August 2020, only to be removed in August 2022.

Considering that Uber has already admitted to breaching Australian Consumer Law by engaging in misleading and deceptive conduct, the court needs to decide on the appropriate penalty, which may differ from what Uber and the ACCC are seeking.

Why is the case relevant?

This case highlights the importance of companies ensuring they are distributing accurate information and taking the necessary care to ensure any statements they make, and the information they give customers, does not deceive or mislead consumers.  It doesn’t matter how large or wealthy a company is, the ACCC is watching, and just as importantly, modern-day consumers are not prepared to put up with large corporations cheating them, even if it is for a relatively low sum of money. Since the fallout from the 2008 Global Financial Crisis, consumers globally have collectively taken a stance against large-scale corporate cheating.

When using digital technology, companies must take appropriate measures to monitor the accuracy of their algorithms. Taking these measures is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour. Corporations can’t get away with blaming technology for their conduct.

In the digital age we now live in, the ACCC continues to take on many high-profile cases, such as the case against Uber, to act as a deterrent to other companies by showing that those who intend to mistreat or mislead their customers will be held to account.

Key takeaways

Businesses are not permitted to engage in misleading or deceptive conduct that entices customers to make certain purchasing decisions. Such conduct is a breach of the Australian Consumer Law.

Even if a business has unintentionally misled or deceived customers, it can still be liable to pay penalties if found to have breached Australian Consumer Law.

Businesses should ensure that all the information they provide to consumers is accurate and up to date, including information displayed on their apps, websites, advertisements, and marketing material.

Businesses should ensure that any algorithms used in their apps or websites produce consistent results and that the appropriate compliance checks are in place to ensure ongoing accuracy.

Attwood Marshall Lawyers – protecting consumer rights

If you have suffered financial loss due to a business breaching Australian Consumer Law, including by misleading or deceiving you, or not upholding their statutory warranties to deliver a quality product or service, we have a dedicated team of dispute resolution specialists who can quickly and effectively assist you to seek redress for any financial loss you have suffered.

At Attwood Marshall Lawyers, our lawyers have a comprehensive understanding of the Australian Consumer Law and we assist clients aggrieved in this way on a daily basis.  

If you are involved in a competition or consumer-related matter, please contact our Commercial Litigation Department Manager, Amanda Heather, at (07) 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071 to discuss your options.

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Jade Carlson Senior Associate Attwood Marshall Lawyers

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