Samsung Fined by Taiwan’s Fair Trade Commission for Astroturfing

On October 24, 2013, Taiwan’s Fair Trade Commission announced that Samsung was being fined 10 million New Taiwan Dollars for paying others to post negative comments about a business competitor on the Internet.  This act of masking paid content under the guise of Internet comments, blog posts, tweets, and other "grassroots" communications is known as “astroturfing.”  The fine equals roughly 340,000 U.S. Dollars.

Taiwan’s Fair Trade Commission opened its investigation of Samsung in April of 2013 amid allegations that the company was implementing deceptive advertising practices.  In particular, Samsung was alleged to have hired students to post negative reviews of rival handset-producer HTC while posting positive reviews of Samsung’s products.  At the time the investigation was announced in April of 2013, Samsung posted the following statement on its Facebook page, apologizing for any illegalities possibly committed by the company:

Samsung Electronics remains committed to engaging in transparent and honest communications with consumers as outlined in the company’s Online Communications Credo. We have encouraged all Samsung Electronics employees worldwide to remain faithful to our Credo. The recent incident was unfortunate, and occurred due to insufficient understanding of these fundamental principles.

Samsung Electronics Taiwan (SET) has ceased all marketing activities that involve the posting of anonymous comments, and will ensure that all SET online marketing activities will be fully compliant with the company's Online Communications Credo.

We regret any inconvenience this incident may have caused. We will continue to reinforce education and training for our employees to prevent any future recurrence.

As expected, the ensuing investigation found the allegations of astroturfing to be true with Samsung hiring a large number of writers to post negative comments about competitors in Taiwanese forums while heaping false praise on Samsung.  Taiwan’s Fair Trade Commission also levied fines on two Taiwanese marketing firms for a combined total of $100,000 for their part in the scheme.

This is not the first time Samsung has been implicated in astroturfing. In fact, this past August Samsung was accused of paying developers to promote an upcoming developer competition on the online community Stack Overflow.  However, Samsung claimed they were unaware that a public relations firm was offering cash on their behalf and the PR firm corroborated Samsung’s claim.

Via TheVerge.com

(Blog entry written by Alex Diamond, IBLT/Carter DeLuca Entrepreneurship Support Fellow for the Fall 2013 semester)