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False or misleading advertising claims lead to significant fine for Samsung

False or misleading advertising claims lead to significant fine for Samsung

Samsung Electronics Australia Pty Ltd (Samsung Australia) has admitted to contravening the Australian Consumer Law (ACL) in Federal Court proceedings brought by the Australian Competition & Consumer Commission (ACCC) in 2019, alleging that it made false or misleading claims about the water resistance of a range of Galaxy phones.

The Federal Court’s Decision

In proceedings brought by the ACCC, the Federal Court ordered Samsung Australia to pay $14 million in penalties.

The proceedings concerned a series of advertisements by Samsung Australia, including on television, social media and billboards which contained claims and imagery suggesting that a range of Galaxy phones were suitable to be submerged in pool and sea water.

Following a myriad of complaints from consumers who reported having had problems with a Galaxy phone after it was exposed to water, Samsung Australia acknowledged that there was a risk that the phone’s charging port would corrode and stop working if the phone was charged while wet.

You can read more about the decision in the ACCC press release attached.

Implications of the decision

Even though this is a severe penalty, there has been an increase in maximum penalties for breaches of the ACL since the action was brought by the ACCC. False or misleading conduct in contravention of the ACL could now attract larger penalties than the penalty levied on Samsung.

The court’s decision highlights that false or misleading advertising can result in hefty penalties and reputational damage to a business. It also highlights the fact that product-related advertising claims need to be substantiated: for example, if a brand highlights the use of its product in a particular way, it needs to be confident that the use won’t damage the product (and have testing to prove it).

Get in touch

If you have any questions about the implications of the Samsung Australia case, or need assistance with advertising compliance, please get in touch with Raph Goldenberg.

This content is provided for reference only and may not be current on the date of access. It does not constitute legal advice and should not be relied upon as such.

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