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Oracle Faces FTC Scrutiny For Trash Talk Ads

Advertising regulators cite Oracle a fourth time for running "overboard and unsupported" ads, will refer matter to Federal Trade Commission.

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The National Advertising Division (NAD), a unit of the ad industry's Advertising Self-Regulatory Council (ASRC), announced Thursday that it is citing Oracle for a fourth time for running advertisements containing what it says are misleading claims and has referred the matter to the Federal Trade Commission.

In the latest rebuke, which was sparked by an IBM complaint, NAD said a recent Oracle ad campaign was "overbroad and unsupported" in claiming that the Oracle Sparc T5 has "2.6x Better Performance" as compared to IBM's Power7+ AIX server. NAD said in a statement that claims based on "one specific Oracle configuration against one specific IBM configuration" could not be applied to an entire line of products.

As it has done in the past, Oracle issued its own statement saying it disagrees with the decision and believes that the ad is fair and accurate. "The ad provides a clear and objective comparison between an IBM Power7+ AIX system and an Oracle SPARC T5 system using industry standard benchmark results that legitimately show 2.6x better performance by the Oracle system," Oracle stated. "NAD has failed to take into account the sophistication of the ad's target audience, namely businesses that purchase enterprise hardware systems."

[ Want more on regulator-challenged advertising campaigns? Read Oracle Appealing Trash Talk Wrist Slap. ]

NAD previously cited Oracle campaigns that ran in April 2012, July 2012 and October 2012 comparing Oracle Exadata performance to IBM Power Server performance. In each case, NAD rejected Oracle assertions that the results were substantiated and recommended that the company discontinue comparative product-performance claims. And in each case, Oracle sought appeals, but these, too, were rejected by NAD.

Given Oracle's "repeated failure to make a good faith effort to bring its advertising into compliance with the guidance," NAD said it is referring the matter to "the appropriate governmental agency for possible law enforcement action."

According to spokesperson Linda Bean, the ASRC refers "a handful of cases" to the FTC each year.

"Sometimes the advertiser gets a letter from the FTC and then they come back to us and say, 'we'd rather participate [in the self-regulatory process],'" Bean told InformationWeek. "Sometimes the FTC does its own investigation and reaches its own determinations."

In extreme cases, advertisers have been hit with fines by the FTC, Bean said.

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David F. Carr
David F. Carr,
User Rank: Author
8/2/2013 | 9:03:06 PM
re: Oracle Faces FTC Scrutiny For Trash Talk Ads
glad to see an attempt to keep tech advertising honest
D. Henschen
D. Henschen,
User Rank: Author
8/2/2013 | 6:19:35 PM
re: Oracle Faces FTC Scrutiny For Trash Talk Ads
It may be that IBM's complaints have something to do with it. The squeaky wheel gets the grease, as they say. Each of these investigations was triggered by requests by IBM to examine Oracle's ads. Could be in other cases rivals aren't speaking up like IBM or don't have as much clout.
User Rank: Ninja
8/2/2013 | 4:54:20 PM
re: Oracle Faces FTC Scrutiny For Trash Talk Ads
I find it interesting NAD picks on Oracle (for good reason) but seems to be blind to other vendor's false or miss leading adds. I'd like to think NAD is on the side of the consumer but the lack of consistency proves different.
D. Henschen
D. Henschen,
User Rank: Author
8/2/2013 | 4:10:06 PM
re: Oracle Faces FTC Scrutiny For Trash Talk Ads
Here's more interesting insight from Linda Bean of ASRC:

"NAD refers advertising to the FTC for three reasons G㢠the company declined to participate, the company declined to abide by NADGăÍs recommendations to modify or discontinue advertising claims, or the company participated and agreed to make recommended changes, but a follow-up review by NAD indicates the company hasnGăÍt made a good-faith effort to comply.

We know that the FTC reviews all referrals it receives from NAD, so there is always an initial contact between the advertiser and the FTC.

There are G㢠broadly speaking G㢠four possible outcomes: 1) The company decides to return to NAD and participate in the process. 2) The company decides to abide by the terms of an NAD decision. 3) A company could decide to fight it out with the FTC. 4) The FTC could decide that pursuing a particular case doesnGăÍt warrant the expenditure of its resources.

Interesting referral cases include:
Airborne, which was making cold-prevention
claims. NAD referred the company to the FTC in 2002. Six years later, the
company reached a $30 million settlement with the FTC.

Oreck, the vacuum cleaner company, reached a $750,000 settlement with the FTC in 2011. NAD referred the company in 2009."
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