When Cellphones Explode: The Issues Facing Samsung Over Their Exploding Note 7

September 13, 2016

The United States Consumer Product Safety Commission (CPSC), along with Samsung Electronics, is now urging Galaxy Note 7 users to power down their phones due to the possibility of the Note 7 lithium ion battery catching on fire and exploding. This is just the latest blow to Samsung’s Note 7 smart phone, which was originally proclaimed as one of the best smartphones ever released by a number of consumer technology publications.

Just fourteen days after the highly anticipated release of Samsung’s Note 7 phablet, Samsung issued a worldwide recall of 2.5 million Note 7s.

You may be asking how bad could it have gotten for Samsung to recall 2.5 million phones worldwide? While Samsung has only officially verified 35 exploding phones, there have been reports of phones setting cars and houses on fire. In fact, the issue became so worrisome, it caused the Federal Aviation Administration to issue a specific warning about the Samsung Note 7, which is unprecedented by the organization. The FAA stated, “’in light of recent incidents and concerns’ involving the smartphones, the agency ‘strongly advises passengers not to turn on or charge these devices’ on planes and ‘not to stow them in any checked baggage.’”
For Samsung this could not have come at a worse time. One of the reasons for the huge success of the Note 7 was likely due to disappointed iPhone users looking for a change.  With the new iPhone 7 being released this week, this recall may cause previous iPhone users who had switched to the Note 7, to go back to the iPhone.
Current estimates show this recall costing Samsung approximately one billion dollars. These costs include replacing all 2.5 million phones, and issuing replacement phones for those who need one. That does not include potential reputation damage which will occur do to this recall, devaluation of Samsung stock, or any liability Samsung may have in potential court cases involving Note 7 fires.
However, Samsung may have bigger issues on the horizon with its Note 7 phablet. Section 15(b) of the Consumer Products Safety Act states that upon discovery of a product that “contains a defect which could create a substantial product hazard,” such as a risk of injury to the public, the distributor shall immediately inform the commission of the defect or risk. Prior to the CPSC involvement in the Note 7, Samsung initially issued their own recall without government aid. This caused confusion because retailers continued selling Note 7 phones even after the Samsung recall had begun. When Samsung issued their own recall and failed to work with the CPSC, Samsung opened themselves up to potential liability.
In an article by David Bixenspan of Law Newz, David states, “voluntary recalls like this are designed ‘to avoid intervention by government agencies.’ Samsung wants the phones out of consumers’ hands before disaster strikes.” However, Samsung’s disorganized attempt at a recall may have only made things worse, and now the government is getting involved anyway.  The recall has been extremely unorganized and confusing to Note 7 owners. So confusing in fact that CNN Money released an article titled, “Confused about the Samsung Galaxy Note 7 recall? Here’s what to do.” The Consumer Products Safety Act is designed to prevent confusion during these large-scale recalls. By failing to work the CPSC right away, it prevented a uniform approach in the way the recall was handled, and even allowed retailers to keep selling the phones. Because there was no uniform approach behind Samsung’s recall, retailers gave conflicting information to consumers about what they needed to do.
Still, in the end, Samsung will likely recover from this fiasco. They are not the first smartphone company to suffer a disastrous product launch. Further, what made the Note 7 so popular was its cutting edge technology and great presentation, something, if the rumors are to be believed, will be even better for the next generation of Samsung Galaxy S phones. However, before Samsung can begin repairing their image, the company must make sure no more mistakes are made in their global recall.