Uber has agreed to pay a 26 million Australian dollar (£15 million) fine for misleading riders by falsely warning they could be charged a cancellation fee and for inflating estimates of comparable taxi rides, the ride share company and Australia’s consumer watchdog said.

Uber BV, a Netherlands subsidiary of the San Francisco-based Uber Technologies, admitted breaching Australian Consumer Law by making false or misleading statements in its app, the Australian Competition and Consumer Commission said in a statement.

The first offence stems from a free cancellation policy that allows a customer to cancel a booking at no cost up to five minutes after a driver has accepted the trip.

Between at least December 2017 and September 2021, more than two million Australian customers who attempted to cancel within that five-minute window were warned: “You may be charged a small fee since your driver is already on the way.”

The cancellation message has since changed to: “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 chairwoman Gina Cass-Gottlieb said.

Uber said in a statement almost all riders chose to cancel their trips despite the warnings.

The second offence related to estimated taxi fares provided by the app to Sydney customers between June 2018 and August 2020 when the taxi ride option was abandoned.

The algorithm used to calculate the fare ranges inflated the taxi estimates. The actual taxi fare was almost always cheaper than Uber’s lowest estimate.

Uber had not ensured the algorithm was accurate, the commission said.

Uber apologised for the taxi fare estimate “being higher than it should have” been.

Uber said it co-operated with the commission and made changes to its platform based on concerns raised by investigators.

“We are committed to continually raising the bar — for ourselves, our industry and most importantly for the people who use our services,” Uber said.

Uber and the commission agreed to jointly ask the Federal Court to order the fine.

The maximum fine Uber could have faced is difficult to calculate because the penalties rose sharply during the time in question.

The maximum financial penalties under Consumer Law had been 1.1 million dollars (about £620,000) per breach.

They are now 10 million dollars (£4 million), three times the value of the benefit received or 10% of annual turnover.