Samsung Electronics’s Australian unit is being sued by Australia’s consumer watchdog for allegedly misleading consumers by promoting water-resistant Galaxy smartphones as suitable to use in swimming pools and the surf according to an article by TechRadar.
Being the world’s largest smartphone maker, Samsung did not know or sufficiently test the effects of pool or saltwater exposure on its phones when ads showed them fully submerged, the Australian Competition and Consumer Commission (ACCC) lawsuit says.
Samsung has been depicting phones in or near to unsuitable environments such as swimming pools and oceans since 2016, the ACCC alleges, when it didn’t have a basis to make this representation. The case is the first filed by a major regulator and could result in multi-million dollar fines.
The ACCC alleges law breaches occurred in more than 300 advertisements. If proven, each breach after 1 Sept. 2018 can attract a fine of up to A$10 million ($7 million), triple the benefit of the conduct or as much as 10% of annual turnover.
Breaches prior to 1 Sept. 2018 can attract penalties as high as A$1.1 million.
The ACCC said the ads were false, misleading and deceptive because the phones were not suitable for use in all types of water, which Samsung acknowledged on its website by advising against using the Galaxy S10 at the beach or a pool.
“Samsung showed the Galaxy phones used in situations they shouldn’t be to attract customers,” the ACCC commissioner, Rod Sims, said on Thursday.
“Under the Australian consumer law, businesses cannot mislead consumers about their products’ capabilities.”
Samsung said it intends to defend the proceedings.
In a statement, Samsung Australia said that Samsung stands by its marketing and advertising of the water resistance of its smartphones and that they are also confident that they provide customers with free-of-charge remedies in a manner consistent with Samsung’s obligations under its manufacturer warranty and the Australian Consumer Law.
The ACCC alleges that Samsung did not sufficiently test its phones to back its advertised claims, and denied warranty claims from users whose phones were damaged in water.
Samsung’s Galaxy phones advertised as water resistant typically cost more than those that are not, the ACCC said.
“Samsung itself has acknowledged that water resistance is an important factor influencing Australian consumer decisions when they choose what mobile phone to purchase,” Sims said.
The suit is another blow for the electronics giant which suffered reputational damage in 2016 when its Galaxy Note 7 smartphones suffered a costly recall after being found fire-prone.
The firm, also the world’s biggest maker of memory chips, is due to announce preliminary quarterly earnings on Friday. It is widely expected to post a profit plunge due to chip price falls.