Washing machine fires and recall

Samsung had a problem with several of their washing machines; they caught on fire! They issued a recall in 2013, however, 2 years later, many of the effected washing machines are still in the community and pose a dangerous fire and safety hazard.

Samsung issued further recall notice in June 2015 accompanied by press releases to raise the public’s awareness of the danger these machines pose.

Even though only a small percentage of purchasers of the effected machines have contacted Samsung for a remedy, both Samsung and the NSW Minister for Fair Trading are confident the Samsung has done enough to ensure the safety of the community.

What more could Samsung do to reach the owners of the machines?

According to the recall notice, the washing machines were sold through major stores and specialist retailers.

Samsung should have a process to track where the particular models have been sent and in what quantities, and these retailers should be able to track the sales to their customers. I know many of them do; whenever I’ve purchased electrical goods, the retailer takes my details. After all, we aren’t talking small, cheap goods here, but a significant purchase to their customers, ones that come with guarantees and warranties. The retailers should have been able to quickly identify the purchasers of these dangerous goods and advised them of the recall and the potential hazard posed by the goods.

Choice believes that Samsung didn’t go far enough with warning consumers of the danger and should have run advertisements to reach a wider audience. Following the low contact rate after the first recall notice was issued and given the seriousness of the hazard, this seems like a reasonable response given the consequences of a house fire.

Consumer Guarantees and warranties

In the recall notice Samsung asked owners of the effected models to contact it to arrange for a repair, replacement or refund.

In August the newspapers ran stories about the “dodgy repairs” that had been applied to faulty machines using plastic bags to prevent the electric components becoming wet and causing a fire. It appears that several of the “repaired” machines subsequently caught fire.

It also appears that some consumers are only being offered a repair to their recalled washing machines. Under the Consumer Guarantees provided in  the Australian Consumer Law when consumer goods have a major fault (which these washing machines have), the consumer has the right to choose whether they want the goods repaired,  whether they take a replacement or have their money returned.  The ACCC is now investigating these allegations.

A major fault is:

1. one that would have stopped someone from buying the item if they had known about it
2. one that renders the goods unsafe
3. if the goods are significantly different from any samples or descriptions provided to the consumer before purchase
4. if the goods do not do what the customer was told they would do or don’t do what the customer asked for
5. one that can’t easily or quickly be fixed

What are the risks and costs to a company selling faulty goods or failing to abide by the consumer guarantees?

The risks to Samsung’s business from the recall, the apparently “botched” “repairs and from the ACCC finding that Samsung had failed to offer its customers the remedies that they are legally entitled to under the Consumer Guarantees include:

• The costs of recall
• The costs of replacements or refunds for all the faulty goods
• The costs of consequential damage caused by faulty machines
• The damage to its reputation as a manufacturer of quality electronic goods ( not only washing machines)
• Fines for failing to provide the remedies as required under the Consumer Guarantees

A compliance program is an insurance policy that reduces the chances of these risks

Samsung could have avoided much, if not all, of this problem if they had an effective compliance program in place.

To be effective, the company needs to have a culture of compliance, supported from the company’s leaders and bosses.

The compliance program needs to identify and address the relevant elements of the law that apply to the company.

There needs to be a good awareness, communication and training program in place that drives compliance.

The program needs to be monitored, audited and modified to keep it effective.

I have no doubt that Samsung has a compliance program that addresses its obligations under the Australian Consumer Law, but it has not delivered on this dangerous issue.

For assistance in identifying where your company may be at risk of breaching the Australian Consumer Law and having your current compliance program reviewed, or a new one developed, contact us at Ascentia Sustainability.

This is not intended to be legal advice but is general information.