Uber agrees to $19M fine over misleading riders on cancellation charges
The U.S. Justice Department sued Uber in late 2021
Uber agreed to pay a fine of around $19 million in Australia for misleading riders by falsely warning they could be charged a cancellation fee and for inflating estimates of comparable taxi rides.
The country's consumer watchdog, the Australian Competition and Consumer Commission, said Tuesday that Uber B.V. – a Netherlands subsidiary of San Francisco-based Uber Technologies Inc. – had admitted to breaching Australian Consumer Law in its app.
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Between at least December 2017 and September 2021, more than 2 million Australian customers who attempted to cancel their rides within five minutes of booking were warned that they "may be charged a small fee" because the driver was "already on the way."
Most services have a five-minute window after a driver has accepted a trip for riders to cancel without facing any charge.
Uber said almost all riders chose to cancel the trips anyway.
In this July 15, 2015, file photo, Uber driver Karim Amrani sits in his car parked near the San Francisco International Airport parking area in San Francisco. (AP Photo/Jeff Chiu / AP Newsroom)
Now, the cancellation has been altered to read: "You won’t be charged a cancellation 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," Commission Chair Gina Cass-Gottlieb said.
Additionally, the algorithm used to calculate taxi fare ranges provided by the app to Sydney customers between June 2018 and August 2020 inflated the estimates.
The commission said Uber had not ensured the algorithm was accurate and that the actual taxi fare was almost always cheaper than Uber’s lowest estimate.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UBER | UBER TECHNOLOGIES INC. | 71.62 | +0.06 | +0.08% |
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Uber said it cooperated with the commission and made changes to its platform, apologizing for the taxi fare estimate "being higher than it should have."
"We are committed to continually raising the bar — for ourselves, our industry and most importantly for the people who use our services," it said.
Uber and the commission agreed to jointly ask the Federal Court to order the fine.
In November, the U.S. Department of Justice sued Uber, claiming the company charged "wait time" fees to physically disabled customers who took more than two minutes to get into the vehicle.
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Evercore ISI senior managing director Mark Mahaney discusses Uber’s stock performance.
The suit claimed the service violated Title III of the Americans with Disabilities Act (ADA).
In a statement issued to Fox News then, an Uber spokesperson said the company had been in "active discussions" with the DOJ prior to the "disappointing lawsuit."
"Wait time fees are charged to all riders to compensate drivers after two minutes of waiting but were never intended for riders who are ready at their designated pickup location but need more time to get into the car," an Uber spokesperson said. "We recognize that many riders with disabilities depend on Uber for their transportation needs, which is why we had been in active discussions with the DOJ about how to address any concerns or confusion before this surprising and disappointing lawsuit."
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"We fundamentally disagree that our policies violate the ADA and will keep improving our products to support everyone’s ability to easily move around their communities," the company noted.
FOX Business' Kyle Morris and The Associated Press contributed to this report.