The ACCC takes Uber to Court
On 26 April 2022, the Australian Competition and Consumer Commission (“the ACCC”) commenced proceedings in the Federal Court of Australia against rideshare company Uber, for breaching Australian Consumer Law.
Uber is facing a $26 million penalty for breaching Australian Consumer Law by engaging in deceptive or misleading conduct, and making false or misleading representations within its app.
Within its terms and conditions, Uber provided its users with a free cancellation period of 5 minutes in which they could cancel the ride they had ordered, and not be charged a fee for it. Between 2017 and 2021, over 2 million users were shown a misleading warning when cancelling their ride within the 5 minute period, advising that they may be charged a “small fee”.
“Uber admits it misled Australian users for a number of years, and may have caused some of them to decide not to cancel their ride after receiving the cancellation warning, even though they were entitled to cancel, free of charge, under Uber’s own policy,” ACCC chair Gina Cass-Gottlieb said.
The ACCC and Uber have agreed to make joint submissions to the Federal Court for the $26 million fine to be approved.
“We think this is a significant penalty. That Uber has agreed to put joint submissions with us to the court for this penalty shows they understand how importantly and seriously they see this conduct,” Ms Cass-Gottlieb told The Australian Financial Review.
In addition, between June 2018 and August 2020, Uber users in Sydney had the option to use Uber Taxi. This service allowed users to utilise the Uber app to book a regular taxi. Uber has admitted to falsely inflating the estimated taxi fare so that customers would opt for an Uber ride instead.
“Uber admits its conduct misled users about the likely cost of the taxi option, and that it did not monitor the algorithm used to generate these estimates to ensure it was accurate,” Ms Cass-Gottlieb said.
It will be interesting to see whether the Federal Court will agree with the ACCC about the seriousness of Uber’s misleading conduct and impose the proposed $26 million penalty. That would be a very deserved one star rating for Uber.