Holmes Institute HC2121: Comparative Business Ethics & Samsung Lawsuit

This essay examines the legal and ethical implications of the Australian Competition and Consumer Commission (ACCC) lawsuit against Samsung regarding misleading advertisements about the water resistance of its Galaxy phones. The essay analyzes the ACCC's arguments, highlighting Samsung's alleged false claims about the phones' ability to withstand various water conditions. It explores the ethical dimensions of the case, focusing on honesty, loyalty, and corporate social responsibility. The essay delves into relevant ethical philosophies, including utilitarianism and deontology, to assess Samsung's actions. It further discusses the impact of the case on Samsung's reputation and the broader implications for consumer rights and business ethics. The essay concludes by emphasizing the importance of transparency and ethical conduct in advertising to protect consumers and maintain public trust.

Running Head: COMPARATIVE BUSINESS ETHICS & SOCIAL RESPONSIBILITY 0
Comparative Business Ethics & Social Responsibility

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Samsung in court for fallacious phone water resistance advertisements
The ACCC (Australian Competition and Consumer Commission) recently sued Samsung on
the misleading advertisement related to water and cell phones. Recently updated in the
newspaper, creating a buzz already from a widely talking company Samsung is all about the
advertisement placed about the water resistance devices from a variety range of already
being traded into the market. The false and misleading advertisement given by Samsung is
being talked and discussed claiming that the working of device underwater (ACCC, 2019).
This essay will be including the issues between the ACCC and Samsung Company that how
according to the ACCC, Samsung company mislead the people showing advertisement
related to the usage of the devices can be used underwater, but the context is not true in
practical terms. The essay shall continue to favor the arguments raised by the ACCC taking
this step against the company and in favor of the general public as well. The ethical problems
covered into this expression will be discussed in context with how the ethical issues have
been affected.
Since probably around February misleading advertisement given by Samsung is outreached
on social media, digital appliances, television, billboards, print media and other factors
concerning to the advertisements depicting, being devices exposed to the water, to oceans,
rivers, waterfalls, swimming pools and others (Furler, 2019).The arguments which are being
raised into the news headline are the misleading statement which is delivering to the
customers. The ACCC (Australian Competition and Consumer Commission) found that the
claim was not true and sued the company. ACCC makes a note and claimed for the following
basis; Samsung did not exactly tested its products under both types of water up to the level of
the required testing, affecting its useful life. Samsung range of Galaxy series in the market,
gets damaged if comes in contact other than fresh water. Example: Samsung product, Galaxy
S10 phone is ‘not advised for beaches or pool use.’ Samsung has ignored the claims of the
customers whose devices were damaged when used under or in the water (ACCC, 2019).
Apart from these claims, the ACCC adds to the list that the representations are not true, and
misleads the people around the globe. As galaxy phones were not ideal for all types of water
and the life longevity is adversely affected if exposed in water (inclusive of non-fresh water).
Well, something that’s being going on in Australia since past 3 years. Samsung has been
claiming that its devices are water resistant in “All kinds of water”, which is not at all true.
Materials which are used to make smart phones act differently when exposed to different

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types on environments, in this case, different type of water bodies. Samsung claimed its
phones are water resistant up to 1.5 meters till 30 minutes, even in water bodies like pool and
oceans while you surf (Australian Associated Press, 2019).This false claim by Samsung has
been reported by Australian Competition and Consumer Commission, to Federal Court of
Australia (FCA). Since the case was under FCA guidelines, it has been accepted and for
further details, keeps scrolling.
The business follows certain ethics in the protection of the interest of the public and
consumers’ honesty, loyalty, integrity, trust-worthiness, leadership, concern for others,
respect for others etc. The concept of honesty deals with the revealing of the facts and related
information about the product in the market (Crane, et al., 2019). Being loyal to the customer,
in order to relate the satisfaction and customer after sales service served to the customer.
Integrity means the quality of being honest and complies with the working principle in the
organization in terms of the customer-company relationship. When a customer buys the
product of a certain company that person trust the company and its related aspects of the
issues and the products sold by them in the market. The process of leadership being followed
in the company also maintains the decorum and product quality which also affects the quality
of the service in the context of the consumer (Anon., 2019). Decision making issues and basic
fundamental issues in any organisation or a company should be taken care of (Oster, 2019).
Now coming to the social responsibilities of an organization, it can be seen that Samsung has
violated Corporate Social Responsibility (CSR), as being a part of society it has lied to people
about full capabilities of its Samsung Galaxy devices. The mineral content in different types of
water, would affect the phone in different manner is not included in any advertisements,
(which is an extremely important detail) that company has placed throughout the social
media, tickets, stores, posters and banners (corpgov, 2019). Now, having placed misleading
ads all over the places, where, people spend their most of the time, on internet, outdoor
entertainment, and seeing all the ads, there, Samsung has targeted the subconscious
decision making capability of a consumer.
The ethics which are involved in the business organization or in a company to its customers
are honesty and loyalty. These are both explained by the morale philosophies as explained
under. The philosophy of the Utilitarianism says the amount of satisfaction derived from the
available use of the next commodity in the order of the consumption or doing the action which

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gives the higher level of satisfaction in the required amount (Mill, 2017). Samsung company
violet this philosophy in the ongoing business in order to mislead the customers using the
device in lieu of using it in the manner it should be used. The concept of utilitarianism is
defied, as the company did not follow the rules regarding the level of satisfaction derived from
the course of action (Anon., 2019).
The second concept of the same follows is Deontology, which literally means the preservation
of individual rights and the intentions complied with the particular behavior rather than its
consequences (BBC, 2014). The concept implied in the current context is the right of the
usage of the rights of the public rights in the context of the usage of the devices in the
underwater or near water sources. The rights of the public in context, with regard of ACCC
protect the right of disclosure of the information and facts hidden in the sale of the products.
So as to comply with the rights and the duties of the consumer in the market Samsung should
inform the related facts (BBC, 2014).
In general opinion, Australian Competition and Consumer Commission have stood up to the
rights of Australian and general consumers, as they were not getting any kind of support and
assistance from Samsung for the misleading product they sold to their customers. When in
general a continent like Australia is considered, which is surrounded by Ocean from all sides,
water resistance is a feature people would consider in their smart phones. Knowing this,
Samsung didn’t only play with the trust of customers but they failed to show their integrity as
an organization to the society, violating Corporate Citizenship, that they should have not done
(corpgov, 2019). While on the other hand ACCC stood up to the rights of its consumers, filed
a petition and giving a ray of hope to all the customers out there, that no matter what,
Australian Government is with them, proving a point. Proving not all heroes wear capes, some
just file petitions against false claims to help its people.
The concept of Utilitarianism in the present case of ACCC and Samsung is applied; the level
of maximum benefits is applied from the customer point of view. Utilitarianism concept derives
from the case helps in improvisation of the related theoretical aspect in the given concern.
The concept of deontology also protects the rights of the customers and general public in the
context of the particular issue raised from the case sued. Both of the policies are the base to
the customer retention in the company. The impact of the case on Samsung Company is they

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are still fighting for themselves to get away from the case and prove themselves innocent in
the eyes of law (Yeo, 2019).
In a broader sense, somewhat percentage of Samsung goodwill has deteriorated in the global
market, the authorized person should now be taking care of the raw material should be used
of good qualities, seen or hidden facts should be disclosed properly in front of the audience in
general so that they can buy the appropriate product in the future period of time. The ACCC
has taken a positive step in context of the global customers in order to protect their rights.
Bibliography

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ACCC, 2019. Samsung in court for misleading phone water resistance advertisements. [Online]
Available at: https://www.accc.gov.au/media-release/samsung-in-court-for-misleading-phone-water-
resistance-advertisements
Anon., 2019. 12 Ethical Principles for Business Executives. [Online]
Available at: https://josephsononbusinessethics.com/2010/12/12-ethical-principles-for-business-
executives/
Anon., 2019. Utilitarian Philosophy. [Online]
Available at: http://utilitarianphilosophy.com/definition.eng.html
Australian Associated Press, 2019. ACCC sues Samsung for 'misleading' water-resistant claims on
Galaxy phones. [Online]
Available at: https://www.theguardian.com/technology/2019/jul/04/accc-sues-samsung-for-misleading-
water-resistant-claims-on-galaxy-phones
BBC, 2014. BBC- Ethic Guide. [Online]
Available at: http://www.bbc.co.uk/ethics/introduction/duty_1.shtml
corpgov, 2019. Corporate Governance Defined: Not So Easily. [Online]
Available at: https://www.corpgov.net/library/corporate-governance-defined/
Crane, A., Matten, D., Glozer, S. & Spence, L., 2019. Business ethics: Managing corporate citizenship
and sustainability in the age of globalization. Oxford: Oxford University Press.
Furler, M., 2019. Samsung vows fight over phone water resistance ads. [Online]
Available at: https://www.westerntimes.com.au/news/samsung-vows-fight-over-phone-water-
resistances-cl/3771310/
Mill, J. S., 2017. Utilitarianism. In: s.l.:Jonathan Bennett.
Oster, K. V., 2019. List of Ethical Issues in Business. [Online]
Available at: https://smallbusiness.chron.com/list-ethical-issues-business-55223.html
Yeo, A., 2019. GIZMODO-Samsung Denies The ACCC's Accusations Of Misleading Consumers.
[Online]
Available at: https://www.gizmodo.com.au/2019/07/samsung-denies-accc-accusations-of-misleading-
consumers/

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Appendices

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