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Samsung is refusing to pay for property damage caused by its exploding Note 7 phone

When Samsung began recalling the Galaxy Note 7, we praised the company’s quick action and willingness to address the problems caused by its device. The need for a second recall and the complete cancellation of the Note 7 was a bit harder to compliment, but at least the company hadn’t tried to hide from its own problems… until evidence surfaced that the company was definitely trying to sweep its problem under the rug. Now, adding insult to injury, Samsung is trying to get out of paying for the property damage its devices caused.

There have been 96 Samsung Galaxy Note 7s known to have exploded or caught fire during the few weeks the phone was on the market, according to The Guardian. Thirteen of the failures caused injury, while 47 are recorded as causing property damage of one type or another. In one case, the Note 7 exploded on a nightstand, spraying chemicals across the room, damaging the bed, mattress, curtains, and carpet, as well as the nightstand itself. When John and Joni Barwick reported this to Samsung, the company refused to cover any of the damage caused by its device and referred its customers to Samsung’s insurance company — and the insurance company has refused to cover the replacement cost of any damaged items.

The Barwicks are not a one-time case. Firefighter Wesley Hartzog’s garage caught fire when he left the Samsung device plugged into the wall — and while firefighters haven’t been able to definitively confirm that the Note 7 caused the fire, they have confirmed it wasn’t started by an air compressor on the same outlet. Initially, Samsung offered to pay for his hotel and meals (the fire destroyed wiring and a water heater, both of which require significant repairs). He states: “But the next day Samsung Fire & Marine insurance called me and said it wasn’t going to happen. I feel that was really unprofessional.”

Samsung later partly relented and has paid for temporary housing for Hartzog and his family, but he has no timeline or clarity on what the company will cover as far as his needed home repairs.

Shawn Minter of Richmond VA woke to find his bedroom filling with thick black smoke. Samsung promised to retrieve his device for analysis, but repeatedly failed to do so. Company reps stopped speaking to him once he told them he had turned the device over to the US Consumer Product Safety Commission and have since referred him to Samsung’s insurance company.

It’s tough to say yet whether Samsung is legally required to pay for damage in these cases, and we suspect proving it will be extremely expensive. But that’s also beside the point. If it cost Samsung $50,000 to reimburse each of the 47 people affected (and we know it won’t cost that much, since bedroom sets and nightstands aren’t half that expensive, and there have only been a few reports of major property damage), that comes out to $2.35 million. In a recall expected to cost Samsung $17 billion in lost revenue, $2.35 million is a literal drop in the bucket — 0.014% of the total. Compare that with the potential damage to Samsung’s brand if customers decide to avoid the company’s products in the future, because it failed to do right by the customers it injured by neglecting to properly design its products.

Yes, the purpose of insurance companies and corporations in general is to make money. But a company that makes its cash by throwing customers under the bus will find those customers quickly return the favor as soon as an opportunity presents itself. Google’s Pixel is on the market now and companies like HTC and LG build some highly regarded devices of their own. Samsung’s position as the global Android market leader has been slipping the last few years, thanks to stiff competition from lower-cost vendors like Xiaomi and Huawei. It’s not a good time to be playing games with brand perception, but that’s the risk Samsung is taking when it pulls stunts like this. Ask the ex-Nokia employees at Microsoft or the hardware engineers at Blackberry and Motorola how long it takes for a mobile company to go from market leader to dying has-been.

In other Samsung news, the company filed a DMCA request against a GTA V modder who created a mod that replaced the game’s sticky bombs with exploding Galaxy Note 7s. This abuse of the DMCA isn’t likely to stand, given that Samsung has absolutely no copyright claim to content within GTA V, but it seems to show where the company’s priorities lie. Pro tip, guys: Spend less time chasing YouTubers and modders and more time taking care of the customers whose property you burned, or no amount of free offers will rescue your sales when the Note 8 rolls around. Attacking modders with the DMCA is a good way to wind up with in-game rocket launchers that fire exploding Note 7s, blowing up entire cars.

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