Australia: Uber faces $26m fine for misleading customers over cancellation fees

Uber on Monday was sued by a competition watchdog for informing at least 2 million customers that they could be charged a fee for cancellation. The bookings were free and after the cancellation, the prices were inflated compared to the regular taxi booking fare on its platform. Australian Competition and Consumer Commission (ACCC), and the Federal Court will now decide whether the  $26 million penalty is appropriate for the company to pay as compensation charges to the customers. The ride-sharing firm has agreed to the breach of its terms and condition in a federal court, according to the Australian newspaper The Sydney Morning Herald. 

Ridesharing taxi service breached terms & conditions

The lawsuit was brought on behalf of the Uber customers that booked a ride between December 2017 and September 2021. While Uber informs the riders that they may be charged “a small fee since your driver is already on their way,” it also provides a 5-minute window for the customers to cancel the ride in case the drivers take too long to arrive at the destination. Uber then changed the disclaimer in September 2021 that read: “You won’t be charged a cancellation fee” encouraging many users on its platform. 

Contrary to the terms, the taxi service began charging the riders for cancelling the booking. The company only recently incurred a hefty $203,500 fine from the NSW taxi regulator in 2021 for the numerous safety-related incidences concerning both the riders and the driver. Over the looming bad reputation, Uber’s controversial co-founder Travis Kalanick had to resign from his job owing to the pressure from investors in 2017. Uber, brewing a fresh controversy, agreed to misleading consumers over the cancellation fee and taxi fare issues .

“Uber admits it misled Australian users for several 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 was quoted as saying by The Sydney Morning Herald. In a statement posted Monday,  Uber informed that it has reached a settlement position with the ACCC over the “historical issues” referring to the Australian federal court and ACCC ready to approve a $26 million fine.