- Aug 17, 2014
Samsung has been fined a penalty of $14 million for misleading claims in Australia. The company claimed that seven of its Galaxy series phones were water-resistant, even though they wouldn't work after using in swimming pools or ocean water.
The case was launched back in 2019 over ads related to seven Galaxy smartphones by Australia's consumer watchdog Australian Competition and Consumer Commission (ACCC). The ACCC took Samsung to court for misleading and deceiving customers with its claims about the smartphones with more than 300 advertisements since February 2016.
The ads were posted across social media, online, TV, billboards, brochures and other media depicting the phones as water resistant. They were being used at pools and beaches, while Samsung also advertised them as being water resistant up to a depth of 1.5 meters for 30 minutes.
However, the settlement is for a much smaller set of ads. Samsung has agreed as part of the settlement of the case that nine ads for seven devices were misleading. The company also admitted that if the devices were used in salt water or pools, there could be a material prospect of damage by corrosion to the charging port of the phone.
Samsung has since fixed this issue with hardware and software changes in other models of the Galaxy phones.
Justice Michael Murphy approved the settlement between the smartphone maker and the Australian watchdog. He said that many consumers would have used their phones in the way represented in these ads, relying on the representations.
He added that the $14 million penalty would act as a deterrent and was a “real and sufficient sting” at 14% of Samsung Australia’s profit over the last six years. He further said that the company only cooperated to resolve the matter recently after years of opposition to the ACCC's case.
Gina Cass-Gottlieb, the chair of the ACCC, welcomed the ruling by saying:
“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.”
Samsung will pay a penalty of $14 million in addition to a $200,000 fee as a contribution to the ACCC's costs within 30 days of the order.