Water resistance is special. So special that in the 1960s, James Bond wore a water resistant Rolex Submariner watch. In the 2010s, James Bond has upgraded to a water resistant Sony Xperia smartphone.
Samsung Australia advertises its premium Galaxy smartphones this way:
The new Galaxy S10 is sold with an IP68 water-and dust resistance rating*
*Based on test conditions for submersion in up to 1.5 meters of freshwater for up to 30 minutes. Not advised for beach or pool use. Water or dust damage not covered by warranty.
This image was part of the marketing:
The interest of the consumer regulator, the Australian Competition and Consumer Commission (the ACCC) was drawn to this marketing when it received complaints from consumers whose warranty claims were denied by Samsung Australia after their phones were damaged when used in water.
On 4 July 2019, The ACCC issued a media release:
The ACCC has instituted proceedings in the Federal Court against Samsung Electronics Australia Pty Ltd (Samsung) alleging it made false, misleading and deceptive representations in advertising the water resistance of various ‘Galaxy’ branded mobile phones.
Since around February 2016, Samsung has widely advertised on social media, online, TV, billboards, brochures and other media that the Galaxy phones are water resistant and depicted them being used in, or exposed to, oceans and swimming pools. The ACCC’s case involves over 300 advertisements.
“Samsung itself has acknowledged that water resistance is an important factor influencing Australian consumer decisions when they choose what mobile phone to purchase,” ACCC Chair Rod Sims said.
Samsung’s Galaxy phones which were advertised as being water resistant were sold at a higher price than Samsung phones which do not have this feature.
“Samsung’s advertisements, we believe, denied consumers an informed choice and gave Samsung an unfair competitive advantage,” Mr Sims said.
Samsung has sold more than four million Galaxy branded phones in Australia.
“Samsung showed the Galaxy phones used in situations they shouldn’t be to attract customers,” Mr Sims said.
“Under the Australian Consumer Law, businesses cannot mislead consumers about their products’ capabilities. Any attempt to do so will risk court action from the ACCC.”
The Federal Court Proceedings
Linked to the media release is the Concise Statement of Facts filed in the Federal Court of Australia. This is a summary.
The two representations in the marketing materials which the ACCC alleges contravene the Australian Consumer Law (ACL) are:
- The suitable for use representations: that the Galaxy phones would be suitable for use in, or exposure to, all types of water, including, for example, oceans and swimming pools; and
- The useful life representations: that the useful life of the Galaxy phones would not be adversely affected if the phones were used in, or exposed to, all types of water, including, for example, oceans and swimming pools.
Both of the representations are for future matters which means that Samsung must prove it had reasonable grounds for making the representations (s 4 ACL).
The ACCC alleges that Samsung had no reasonable grounds for three reasons:
- It did not have any or had insufficient test results of the effect of immersion of the phones in liquid;
- It knew that if the phones were immersed in liquid other than fresh water, it could cause damage which could result in operability and cosmetic issues;
- It denied manufacturers’ warranty claims made by customers who claimed that their phones were damaged though exposure to liquid.
The ACCC alleges that the conduct and representations are false or misleading in contravention of ss 18(1) ACL (misleading and deceptive conduct), s 29(1)(a) and (g) ACL (performance characteristics, uses and benefits) and s 33 ACL (characteristics and suitability).
The ACCC alleges that the harm suffered by consumers who were looking to purchase a mobile phone was that they were misled or liable to be misled about:
- The performance characteristics, uses or benefits of the Galaxy phones as being suitable for use in all types of water;
- the performance characteristics, uses or benefits of the Galaxy phones in comparison to cheaper Samsung phones and competing mobile phones; and
- the characteristics and suitability of the Galaxy phones for the purpose of using the Galaxy phones in all types of water.
And that consumers who purchased the Galaxy phones suffered harm when their phones were exposed to water, which was exacerbated by Samsung’s denial of liability under warranty.
And that Samsung’s conduct gave it:
- an unfair competitive advantage over competing mobile phone manufacturers who sold authentic water-resistant mobile phones; and
- a price premium for water-resistant Galaxy phones compared to Samsung Australia’s mobile phones which did not have this feature.
The ACCC is seeking penalties, consumer redress orders, injunctions, declarations, publication orders, an order as to findings of fact, and costs.
Marketing Comments by Michael Field, EvettField Partners – www.evettfield.com
Today’s smartphone is no longer a device of convenience, but rather ‘a part of the user’ which makes marketing messages about performance in a wide variety of circumstances all the more emotive, powerful and appealing.
From a consumer marketing perspective, there is no more powerful message than ‘you can take me anywhere and I’ll perform’, especially to a younger generation where ego and identity are the prime movers of purchasing decisions.
The objective of the Samsung marketing campaign was likely to be more than ‘upselling’ existing Samsung customers to a more expensive smartphone on the promise of better performance. It was likely also directly targeting disaffected consumers of other smartphone handset brands, who may be feeling jaded by the repeated handset failures and issues with iPhone handsets, including warranty and repair issues where water, moisture or dust was detected in the phone.
Samsung’s marketing was clever as it tapped into a deep emotional connection that people have with their smartphone, and an even deeper fear of it breaking or failing in the course of using it in their lives. Especially the ‘adventurous’ part of their lives where the risks of phone damage are higher.