Samsung slugged $14 million over misleading ads, and 3.1 million consumers could claim refunds

Australia’s Federal Court has issued a $14 million fine to Samsung over misleading ads that could lead to compo for customers.

The Samsung Galaxy S7 was one phone advertised in a misleading way, according to the ACCC. Picture: AFP PHOTO / Kirill KUDRYAVTSEV

AS many as 3.1 million Australians could seek compensation from Samsung after the tech giant was slugged $14 million by the Federal Court on Thursday for making “misleading” claims about the water resistance of its smartphones.

The Australian Competition and Consumer Commission issued a lawsuit against Samsung Australia over nine advertisements for its Galaxy smartphones that appeared across social media, its website, and in stores.

The ACCC claimed the ads, in which Samsung smartphones were shown around pool and sea water, misrepresented where they could be safely used.

ACCC Chair Gina Cass-Gottlieb said the watchdog investigated the ads after receiving complaints from consumers with damaged phones.

“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.

Images of Samsung ads that have been found by a court to be misleading. Picture: Supplied

“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.”

Seven Samsung phones featured in the ads between March 2016 and October 2018, including the Samsung Galaxy S7, S7 Edge, the A5 and A7 from 2017, S8, S8 Plus and Note 8, with the ACCC noting that 3.1 million Australians could be affected by the misleading ads.

The ACCC urged consumers who bought any of the seven phones, and experienced damage to their charging port or the phone as a result of submerging it in sea or pool water to “contact Samsung Australia”.

Under Australian Consumer Law, consumers could be eligible for repairs or refunds for products that do not match descriptions made in advertising.

Ms Cass-Gottlieb said the $14 million penalty ordered by the Federal Court was substantial but could have been larger as it occurred before an increase to the maximum penalties for Consumer Law breaches.

“This penalty is a strong reminder to businesses that all product claims must be substantiated,” she said.

In a statement, Samsung Australia said it resolved to pay the $14 million penalty after agreeing that if users of one of these phones attempted to charge it “while pool or sea water remained in the charging port (despite the warning message) then there was a material prospect that the charging port might corrode over time”.

Changes had been made in March 2018 to eliminate the risk of corrosion.

“Samsung regrets if any Galaxy users have experienced an issue with their device as a result of the matters covered by this case,” the statement said.

“If customers wish to contact Samsung, they should call 1300 362 603.”