Samsung Troubles Deepen Following Formal CPSC Action

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The Consumer Product Safety Commission and Samsung last week announced a formal voluntary recall of about 1 million Galaxy Note7 smartphones, after the high-end flagship device was found to have overheated or caught fire in at least 92 incidents.

Samsung was notified of 26 cases of people being burned by the defective 5.7-inch smartphones and 55 cases of property damage, according to the CPSC. The recall applies to phones purchased before Sept. 15.

In an effort to mitigate damage to the brand's reputation, Tim Baxter, president of Samsung Electronics America, issued a video statement apologizing to customers and giving a detailed explanation of what the company is doing to resolve what may be the worst product crisis in its history.

"At Samsung our highest priority is our customers, their aspirations, their needs, their safety," Baxter said in the video message, "and with battery cell defects in some of our Note phones we did not meet the standard of excellence that you expect and deserve. For that we apologize, especially those of you that were personally affected by this."

The formal government recall follows several moves Samsung made earlier in response to dozens of Note7 complaints. It halted sales of the devices and published posts on social media warning customers about the danger of their lithium-ion batteries overheating and catching fire.

The Federal Aviation Administration last week warned passengers not to charge the phones on board commercial flights, and not to stow the Galaxy Note7 in any checked baggage, after tests indicated the batteries were at risk of catching fire.

Samsung notified government regulators about the battery risk, Baxter pointed out, adding that the company was working closely with CPSC to find a solution.

The company had exchanged 130,000 units when the video posted on Thursday. Samsung said replacement phones would be available no later than Sept. 21.

Keller Rohrback, a Seattle law firm that specializes in product liability, on Friday said it was investigating the Samsung Galaxy Note7 incidents and urged users to contact it directly.

Samsung has announced plans for a workaround -- a software update that would prevent the phone from charging above 60 percent of its capacity, thus greatly reducing any fire risk -- for its home market of South Korea, according to Keller Rohrback. However, no similar update was announced for the U.S.

Earlier cases linked the Samsung Galaxy S7 and S7 edge, to potential fires as well, the firm noted.

"Consumers are outraged that instead of keeping them connected, their top-of-the-line cellphone may actually pose a danger to their possessions and loved ones. A mobile phone that could go up in flames is worse than worthless. It should never have been allowed to go to market in the first place," Keller Rohrback said in a statement provided to the E-Commerce Times by attorney Cari Laufenberg.

"Travelers are incredulous that at the very time when they most need their phones -- when traveling -- they are banned from using them," the statement continues. "The FAA now advises that the phones are not to be used or charged during flights and should not be packed in checked luggage."

The recall is doing great damage to Samsung -- not only because the Galaxy Note7 was launched just a few weeks ago, but also because the safety issues are making consumers skittsh about other Samsung products.

"This is a halo product, which means if it works well and people like it, they are more likely to consider and buy other Samsung products," noted Rob Enderle, principal analyst at the Enderle Group.

"Conversely, if the product is catching fire and exploding, buyers are more likely to avoid the Samsung brand, and it will have a huge impact on how much people trust Samsung phones," he told the E-Commerce Times.

The Galaxy Note7 was considered one of the most popular and sophisticated smartphones on the market, effectively doubling as a tablet for many users. It also was considered the jewel in the Samsung crown, which has been the chief rival against Apple for global dominance of the smartphone industry.

"It's especially difficult when you're talking about a flagship product and early on in the launch," said Gartner analyst Tuong Nguyen.

"The people buying the Note7 are likely some mix of tech-savvy, early adopter and high end users. As such, they would expect a lot both in terms of quality and service," he told the E-Commerce Times.

Samsung should have discovered the fire risk during testing, prior to releasing the smartphone to the public, said industry analyst Jeff Kagan.

Further, they should have launched a more limited rollout of the Galaxy Note7 to figure out if there were any problems before the phone got too far out into the mainstream, he told the E-Commerce Times.

"The brand damage is done, and it's serious," Kagan said. "The only question is how deep is the damage and how long will it last."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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