Samsung Electronics Australia Pty Ltd (Samsung Australia) has been ordered by the Federal Court to pay $14 million in penalties after it admitted misleading consumers about the suitability of various Samsung Galaxy phones to be submerged in pool or sea water, in proceedings brought by the ACCC.
The false or misleading claims were made about the water resistance of the S7, S7 Edge, A5 (2017), A7 (2017), S8, S8 Plus and Note 8 Samsung Galaxy phones (Galaxy phones). There were more than 3.1 million of these Galaxy phones sold in Australia.
Between March 2016 and October 2018, Samsung Australia conducted a marketing campaign that included nine ads, published across Facebook, Twitter, Instagram, on its website, and in-store, which represented that these Galaxy phones were suitable to be used in pool and sea water.
Samsung Australia has acknowledged that if the Galaxy phones were submerged in pool or sea water there was a material prospect the charging port would become corroded and stop working if the phone was charged while still wet.
“Samsung Australia’s water resistance claims promoted an important selling point for these Galaxy phones. Many consumers who purchased a Galaxy phone may have been exposed to the misleading ads before they made their decision to purchase a new phone,” ACCC Chair Gina Cass-Gottlieb said.
“We reviewed hundreds of complaints from consumers who reported they experienced issues with their Galaxy phones after it was exposed to water and, in many cases, they reported their Galaxy phone stopped working entirely,” Ms Cass-Gottlieb said.
Prior to the launch of the Galaxy phones, Samsung Australia’s parent company, Samsung Electronics Co., Ltd. (SEC), was already seeking to mitigate the effects of this charging port corrosion caused by charging following exposure to water. Despite this, Samsung Australia’s marketing campaign promoted Galaxy phones being used in pools and sea water while there remained a material prospect the Galaxy phones would be damaged due to corrosion.
“Samsung Australia’s ads promoting its Galaxy phones featured people using their phones in pools and sea water, despite the fact that this could ultimately result in significant damage to the phone,” Ms Cass-Gottlieb said.
“This penalty is a strong reminder to businesses that all product claims must be substantiated. The ACCC will continue to take enforcement action against businesses that mislead consumers with claims about the nature or benefits of their products,” Ms Cass-Gottlieb said.
The vast majority of Samsung Australia’s contravening conduct occurred prior to the increase of maximum penalties for breaches of the Australian Consumer Law. Similar conduct under the new penalty regime could give rise to greater penalties.
Samsung Australia admitted that it had contravened Australian Consumer Law and made joint submissions with the ACCC in respect of penalties and orders.
Consumers who purchased one of the relevant Galaxy phones and experienced damage to the charging port after submerging the phone in pool or sea water and then attempting to charge the phone while water remained in the port are encouraged to contact Samsung Australia.
In 2019 the ACCC instituted proceedings against Samsung Electronics Australia Pty Ltd in the Federal Court for false, misleading and deceptive representations in advertising the water resistance of various ‘Galaxy’ branded mobile phones.