As the fallout continues from Samsung’s failed Galaxy Note 7 smartphone, which was recalled in connection with multiple fires around the world, the South Korean company is facing at least two class-action lawsuits, billions in losses and a massive PR black eye.
In the U.S., three people who purchased the phone on Friday filed a complaint against Samsung seeking class-action status in U.S. District Court for the District of New Jersey. According to the Korea Herald, another 38 plaintiffs in South Korea plan to file suit against the company on Monday.
In the meantime, Samsung is already expecting to face losses of more than $5 billion in connection with the Galaxy Note 7 recall and halt in production. And Bloomberg reported today that executives and employees with Samsung’s mobile phone unit are fearing for their jobs.
Recall Offers Exchange or Refund
Launched with great fanfare and rave reviews in early August, the Galaxy Note 7’s fortunes quickly soured when numerous owners began reporting problems with their devices overheating and even catching fire. One owner preparing to depart on a flight from Kentucky reported that the phone caught fire in his pocket, and another man in that state said he required treatment for smoke inhalation after a bedroom fire reportedly linked to the phone.
In both cases, those fires were reportedly started by replacement phones provided by Samsung after it began an exchange program for its first batch of devices.
On Oct. 11, the company announced that it would stop producing the Galaxy Note 7. Last week, the electronics giant said it would expand its recall program and would let customers exchange their Note 7s for other Samsung smartphones or return their devices for refunds.
Meanwhile, the U.K.’s Guardian newspaper reported today that some Note 7 owners have complained that Samsung hasn’t been taking responsibility for the cost of other damage reportedly caused by phone fires.
“[A]t least three owners have come forward to say they are not happy with how they’ve been treated by Samsung, while a crisis management expert describes the company as ‘seriously underprepared,'” the paper reported.
‘Poor Handling of Note 7 Saga’
Because of the risk of fire linked to the phones, airlines around the world have prohibited passengers from taking their Galaxy Note 7s on board flights. In response, Samsung has been setting up stations in some high-traffic terminals at several airports so owners can transfer their data and exchange their devices for alternate phones.
The company has to date opened customer service points at airports in Sydney, Melbourne and five other cities, according to a page on Samsung’s Australian Web site. As of this morning, the company had not yet published a similar page on its U.S. site, but a report by ABC News on Monday said service reps were on hand to handle exchanges at San Francisco International Airport.
In a commentary today in the South China Morning Post, National University of Singapore Business School professor Chang Sea-Jin noted that the Galaxy Note 7 situation has “battered the tech giant’s reputation.”
“[I]n a connected, social media-driven world that thrives on bad news, its poor handling of the Note 7 saga has become a black mark against the Samsung name,” he said. “The risk is that this undermines key intangibles like customer loyalty, prestige, desirability and positive brand recognition.”
And in more bad news for Samsung, DigiTimes reported today that Qualcomm appears ready to drop Samsung as its supplier for the Snapdragon 830 chips set to go into the next generation of high-end smartphones from many major manufacturers.
