Samsung has agreed to pay a $14 million fine for misleading claims that seven of its Galaxy phones were water resistant when the devices could stop working after being used in swimming pools or in pool water. sea.
Judge Michael Murphy has approved the settlement between the tech company and the Australian Competition and Consumer Commission (ACCC) in the long-running case launched in 2019, over adverts linked to seven Galaxy phone models.
The competition watchdog had alleged that Samsung had misled and deceived customers with its phone claims in more than 300 advertisements since February 2016. In court on Thursday, Samsung lawyer Nicholas De Young said said the full count of affected ads was 684.
Advertisements online, on TV and on billboards showed the phones to be water resistant and used in swimming pools and beaches, although the phones were not suitable for use in pool water. pool or salt water.
The agreed settlement is for a much smaller set of ads. Samsung agreed as part of the case settlement that nine ads for seven devices that were promoted over two and a half years between 2016 and 2018 were misleading.
The company admitted that if the devices were used in salt water or swimming pools, there was “a physical prospect of corrosion damage to the phone’s charging port,” said ACCC attorney Caryn Van Procter, in court.
Meanwhile, Samsung has sold 3 million Galaxy phone models included in the deal in Australia.
The problem would arise when people went to charge their phone while there was still water in the charging port, despite a warning appearing on the phone advising the user against charging it. Samsung has since addressed this issue with hardware and software changes in later models of the Galaxy phone, the court heard.
Although some information was provided to the court about the number of views the Facebook and Twitter ads received – in the hundreds of thousands of views each – the court heard there was no way of knowing how many consumers had purchased the devices from the back of the ads, nor how many had subsequently had a problem with the phone after using it in pool or ocean water and then charging it.
Murphy said in accepting the $14 million settlement that many consumers would have used their phones in the manner depicted in the advertisements, relying on those depictions.
He said $14 million would act as a deterrent and was a “real and sufficient scam” at 14% of Samsung Australia’s profits over the past six years. He also criticized the phone maker for only recently cooperating to resolve the case after years of opposing the case from the ACCC.
He criticized the way products are often marketed in Australia, saying too often the Federal Court hears cases where products are oversold to consumers as part of marketing campaigns.
Samsung was ordered to pay $14 million plus a $200,000 contribution to ACCC costs within 30 days of placing the order.
ACCC President Gina Cass-Gottlieb welcomed the decision.
“Samsung Australia’s ads promoting its Galaxy phones featured people using their phones in swimming pools and seawater, despite the fact that this could ultimately cause significant damage to the phone,” Cass-Gottlieb said.
“This penalty is a strong reminder to companies that all product claims must be substantiated. The ACCC will continue to take enforcement action against companies that mislead consumers with claims about the nature or benefits of their products.
A Samsung spokesperson said the company had extensively tested the products with sea and pool water, but was happy to close the case.
“Samsung strives to provide the best possible experience to all of its customers. Samsung regrets if any Galaxy users have experienced any issue with their device as a result of the issues covered in this case.
The Samsung devices included in the settlement are Galaxy S7, S7 Edge, A5, A7, S8, S8 Plus and Note8 phones.