NAD Refers Advertising by Oracle to FTC After Company Repeatedly Fails to Comply with NAD Recommendations

New York, NY – Aug. 1, 2013 – The National Advertising Division has referred advertising claims made by Oracle Corporation to the Federal Trade Commission, following NAD’s determination that the company has not made a good faith effort to comply with the recommendations of previous NAD decisions.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

NAD has reviewed three separate Oracle advertising campaigns in 2012, each featuring an overbroad and unsupported comparison between one Oracle product and one IBM product. Each campaign was reviewed by NAD following a challenge by International Business Machines (IBM).

In response to each challenge, Oracle sought to support broad implied claims that the Oracle line of products was superior to the IBM line by relying on the results of testing of one specific Oracle configuration against one specific IBM configuration. In each instance, NAD rejected the advertiser’s substantiation and recommended that the claim be discontinued.

NAD published its first decision regarding Oracle’s advertising in April 2012, and the second in July 2012. Oracle appealed NAD’s July 2012 findings to the National Advertising Review Board (NARB), which affirmed NAD’s decision. NAD examined a third Oracle campaign in October 2012.

Now, IBM has brought NAD’s attention to a fourth Oracle advertising campaign, featuring the claim that Oracle’s SPARC T5 has “2.6x Better Performance” as compared to IBM’s Power7+ AIX server.

The advertisement contrasts IBM’s with Oracle’s server and relies on the results of testing one particular configuration of the Oracle SPARC T5 against one particular configuration of IBM’s Power7+ AIX server to support an overall superiority claim for the Oracle line of products.

NAD has determined that the advertising in question features the same stark, overbroad IBM-versus-Oracle comparison that NAD recommended against in the three previous cases.

NAD’s decision notes that given “Oracle’s repeated failure to make a good faith effort to bring its advertising into compliance with the guidance of both NAD and NARB, NAD referred this matter to the appropriate governmental agency for possible law enforcement action.”