Samsung agrees to pay $14m penalty over misleading Galaxy ads

Samsung has agreed to pay a $14m penalty for misleading claims that seven of its Galaxy phones were water-resistant when the devices could stop working after being used in swimming pools or ocean water.

Justice Michael Murphy approved the settlement between the tech company and the Australian competition and consumer commission (ACCC) in the longrunning case launched in 2019, over ads related to seven Galaxy phone models.

The competition watchdog had alleged Samsung misled and deceived customers with its claims about phones across more than 300 advertisements since February 2016. In court on Thursday, the barrister for Samsung, Nicholas De Young, said the full calculation of advertisements affected came to 684.

The ads online, TV, and on billboards showed the phones being water-resistant and being used at pools and beaches, despite the phones not being suitable for use in pool water or salt water.

The agreed 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 that were promoted over two and a half years between 2016 and 2018 were misleading.

During that time, Samsung sold 3m of the Galaxy phone models included in the agreement in Australia.

The problem would arise when people went to charge their phone while it still had water in the charging port, despite a warning popping up on the phone advising the user against charging it. Samsung has since fixed this issue with hardware and software changes in later models of the Galaxy phone, the court heard.

Murphy said, in agreeing to the $14m settlement, that many consumers would have used their phones in the way represented in the ads, relying on those representations.

He criticised how products are often marketed in Australia, saying too often the federal court sees cases brought before it where products are oversold to consumers in marketing campaigns.

The chair of the ACCC, Gina Cass-Gottlieb, welcomed the ruling.

A spokesperson for Samsung said the company had extensively tested the products with both sea and pool water, but welcomed bringing the case to a close.

The Samsung devices included in the settlement are the Galaxy S7, S7 Edge, A5, A7, S8, S8 Plus and Note8 phones.