Samsung Galaxy Note 9
CNBC | Magdalena Petrova
Australia’s rivalry regulator said on Thursday it is suing the local unit of South Korea’s Samsung Electronics, alleging it misled consumers by promoting its Galaxy smartphones as excessively resistant.
The suit, which if successful could result in multi-million dollar fines, centers on more than 300 car-cards in which Samsung showed its Galaxy phones being used underwater in swimming pools and the sea.
The Australian Competition and Consumer Commission (ACCC) alleged the world’s largest producer of smartphones had not conducted sufficient testing to know the actual effects of fresh water or saltwater hazard on its phones.
“The ACCC alleges Samsung’s advertisements falsely and misleadingly represented Galaxy phones would be suitable for use in, or for leak to, all types of water … when this was not the case,” ACCC Chairman Rod Sims said in a statement.
Samsung on its website answered it stands by its advertising, complies with Australian law and will defend the case.
The suit is another blow for the electronics giantess which suffered reputational damage in 2016 when its Galaxy Note 7 smartphones suffered a costly recall after being set fire-prone.
The firm, also the world’s biggest maker of memory chips, is due to announce preliminary quarterly earnings on Friday. It is a great extent expected to post a profit plunge due to chip price falls.
The ACCC said consumers damaged their phones when divulging them to water and that Samsung had refused to honor warranty claims, which the company denied.
The ACCC also symbolized Samsung’s advice to some Galaxy model users that the phones were not suitable for beach or pool use mentioned the firm considered water could cause damage.
“Samsung showed the Galaxy phones used in situations they shouldn’t be to draw customers,” Sims said. “Samsung’s advertisements, we believe, denied consumers an informed choice and gave Samsung an unfair competitive service better.”
The ACCC alleges law breaches occurred in more than 300 advertisements. If proven, each breach after 1 Sept. 2018 can invite 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 old to 1 Sept. 2018 can attract penalties as high as A$1.1 million. ($1 = 1.4223 Australian dollars)