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 seawater.
Judge Michael Murphy approved the agreement between the technology company and the Australian Competition and Consumer Commission (ACCC) in the long-running case launched in 2019, on announcements related to seven Galaxy phone models.
The competition control body had alleged that Samsung had deceived and misled customers with its claims about phones through more than 300 ads since February 2016. On Thursday in court, Samsung’s lawyer Nicholas De Young said the full calculation of the affected ads was 684.
Online, television, and billboard ads showed that the phones were waterproof and used in swimming pools and beaches, although the phones were not suitable for use in pool water. or in salt water.
The agreed deal is for a much smaller set of ads. Samsung has agreed as part of the case resolution that nine ads for seven devices that were promoted for two and a half years between 2016 and 2018 were misleading.
The company has admitted that if the devices were used in salt water or swimming pools, there was “a material prospect of corrosion damage to the phone’s charging port,” ACCC attorney Caryn Van told the court. Procter.
During this time, Samsung sold 3 million of the Galaxy phone models included in the deal in Australia.
The problem would arise when people were going to charge their phone while they still had water in the charging port, despite a warning on the phone advising the user not to charge it. Samsung has since fixed this issue with hardware and software changes in later Galaxy phone models, according to the court.
Although information was provided to the court about the number of views received by Facebook and Twitter ads (in the hundreds of thousands of views each), the court found that there was no way to know how many consumers bought the ads. devices on the back of the ads, or how many had subsequently had an error with the phone as a result of using it in pool or sea water and then charging it.
Murphy said in accepting the $ 14 million deal that many consumers would have used their phones the way they are portrayed in ads, based on those representations.
He said $ 14 million would act as a deterrent and was a “real and sufficient needle” for 14% of Samsung Australia’s profits over the past six years. He also criticized the phone maker for only cooperating in resolving the issue recently after years of opposition to the ACCC case.
He criticized how often products are marketed in Australia, saying that too often the federal court sees cases before it in which products are sold in excess to consumers in marketing campaigns.
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Samsung was ordered to pay $ 14 million plus a $ 200,000 contribution to ACCC costs within 30 days of ordering.
ACCC President Gina Cass-Gottlieb welcomed the verdict.
“Samsung Australia’s ads promoting its Galaxy phones showed people using their phones in swimming pools and seawater, although this could cause significant damage to the phone,” said Cass-Gottlieb.
“This sanction is a strong reminder to companies that all product claims must be justified. 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 spokesman said the company had extensively tested the products with sea and pool water, but welcomed the closure of the case.
“Samsung strives to provide the best possible experience for all its customers. Samsung regrets if any Galaxy users have experienced a problem with their device as a result of the issues covered by this case.”
The Samsung devices included in the deal are Galaxy S7, S7 Edge, A5, A7, S8, S8 Plus and Note8 phones.