Australia's competition regulator announced on 4 July that it is suing the local unit of South Korea's Samsung Electronics, alleging it falsely promoted its Galaxy smartphones as water resistant, thus misleading consumers, writes The New York Times.
The potentially multi-million-dollar lawsuit targets over 300 advertisements where Samsung showed its Galaxy phones being used underwater in swimming pools and the sea.
According to a statement by the Australian Competition and Consumer Commission (ACCC) the South Korean multinational smartphone giant had not conducted sufficient testing to discover the degree to which salty or fresh water can affect its phones.
ACCC chairman Rod Sims said:
"The ACCC alleges Samsung's advertisements are falsely and misleadingly represented that Galaxy phones would be suitable for use in, or exposed to, all types of water... when this was not the case."
"Samsung showed the Galaxy phones used in situations they shouldn't be to attract customers," Sims said, adding that they believe the ads denied consumers an informed choice while granting the company an unfair advantage over rivals.
According to ACCC, Samsung refused to honour warranty claims after consumers caused damage to their phones by exposing them to water.
The ACCC also claimed that the company had advised some Galaxy model users that the phones were not suitable for beach or pool use showing the firm considered water damage to them likely.
If the allegations are proven, each breach after 1 September 2018 can result in a fine of up to A$10 million (US$9.5 million), while breaches prior to that date can attract forfeits as high as A$1.1 million.
Samsung has rejected the allegations and intends to defend the case, saying on its website that it stands by its advertising and is fully compliant with Australian law.
The lawsuit is another blow for Samsung, which reeled from a reputational damage back in 2016, when its Galaxy Note 7 smartphones suffered a recall that was unprecedented for Samsung after they were found to be fire-prone.
At the time Samsung Electronics Co Ltd recalled all the smartphones equipped with fire-prone batteries and halted their sales in 10 markets, with the nature of the problem for the Galaxy Note 7 a serious blow to Samsung’s reputation.