Rideshare company Uber will pay a $21 million fine after admitting it overestimated fees for services and advertised a possible cancellation fee that it never charged.

The fine is $5 million less than the one proposed by Uber and the Australian Competition and Consumer Commission, which took the rideshare giant to the Federal Court over misleading and deceptive practices.

The suggested $26 million penalty “greatly exceeds any amount I consider to be appropriate”, Justice Michael O’Bryan said in handing down his thoughts on the case on Wednesday.

Longstanding tradition is that the penalty is agreed by the parties and approved by judges, provided they’re satisfied it’s appropriate.

But he said the evidence he had been given to back up the proposed fines was grossly inadequate.

“It left the court in the position of speculating whether any harm was suffered (by consumers) and if so, whether it was significant or trivial,” he said.

Uber admitted misleading or deceiving customers in two instances.

The first related to Uber Taxi, a service offered only in Sydney where customers could arrange a rideshare service with registered taxi providers.

Uber admitted that between June 2018 and August 2020 it represented to customers that rides would fall within a displayed fare range, when the actual cost was lower than the lowest estimate.

“It is important to estimate that Uber overestimated the fare at the time of booking and the consumer ultimately paid a lower fare,” the judge found.

“The fare estimate was an overestimate approximately 89 per cent of the time.”

He reduced a proposed $6 million penalty for that contravention to $3 million.

Between December 2017 and September 2021 the company also mislead customers who opted to cancel trips during a period of free cancellation by telling them that they may be charged a small cancellation fee, when no fee was ever charged.

Customers using Uber X, Uber Comfort and Uber Premier received the cancellation fee notice nearly 7.4 million times over that period, while Uber Pool customers received it nearly 75,000 times.

In each case, only about 0.4 per cent of customers chose not to go ahead with cancellation.

Justice O’Byran agreed the $18 million penalty proposed for that contravention was within the range available to him.

In addition Uber will pay $200,000 toward the ACCC’s cost of prosecuting the case, and must publish corrections and implement a compliance program in respect of the Australian Consumer Law.

The company has 30 days to pay the penalties.

Uber admitted some employees were aware of both issues at the time. In a statement the company said it had taken proactive steps based on the concerns raised in the ACCC proceedings, including discontinuing its Uber Taxi option in 2020.

ACCC chairwoman Gina Cass-Gottlieb said consumers rely on apps for accuracy because they cannot independently check or monitor the information themselves.

The penalty was a sign to businesses that misleading consumers was a serious matter, she said.