Samsung in hot waters over misleading ads in Australia

Australia’s consumer watchdog has sued Samsung Electronics Co Ltd’s Australian unit for allegedly misleading consumers by promoting water-resistant Galaxy smartphones as suitable to use in swimming pools and the surf.

The world’s largest smartphone maker 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.

The case is the first filed by a major regulator and could result in multi-million dollar fines. It centers on more than 300 advertisements in which Samsung showed its Galaxy phones being used at the bottom of swimming pools and in the ocean.

“The ACCC alleges Samsung’s advertisements falsely and misleadingly represented Galaxy phones would be suitable for use in, or for exposure to, all types of water … when this was not the case,” ACCC Chairman Rod Sims said in a statement on Thursday.

Samsung said it stood by its advertising, complied with Australian law and would defend the case.

Samsung’s water resistance claims came under heavy scrutiny as early as 2016 when influential US magazine Consumer Reports said the Galaxy S7 phone — which appears dunked in a fish tank in commercials — had failed an immersion test.

Some consumers damaged their phones when exposing them to water and Samsung had refused to honour warranty claims, the ACCC said in the lawsuit, though Samsung said it complied with all of its warranty obligations under Australian law.

The ACCC alleges law breaches occurred in more than 300 advertisements. If proven, each breach after September 1, 2018, can attract a fine of up to A$10 million ($7 million), triple the benefit of the conduct or as much as 10 per cent of annual turnover.