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(link is external),
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.
Source:accc.gov.au