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November 26th, 2012
Contest Did Not Excuse Advertiser Duty to Substantiate Claim
In response to a challenge by International Business Machines Corporation ("IBM"), the National Advertising Division of the Council of Better Business Bureaus ("NAD") reviewed print advertisements produced by Oracle Corporation ("Oracle") stating its Exadata server is "5x Faster Than IBM ... Or you win $10,000,000."
IBM argued these print advertisements, which appeared in The Wall Street Journal and other major newspapers, conveyed the message that the Extradata systems are five times faster than IBM Power systems and that the "contest element" did not negate Oracle's responsibility to substantiate this claim. Oracle argued that the advertisement did not make a performance claim but issued a challenge to consumers. It did not provide any speed performance tests, examples of comparative system speed superiority or any other data to substantiate its claim.
In its decision, the NAD concluded that, "even accounting for the sophisticated target audience, a consumer would be reasonable to take away the message that Oracle's Exadata systems do indeed run five times as fast as IBM's products. The fact that the claim was made in the context of a contest announcement [did] not excuse the advertiser from its obligation to substantiate this message of superior speed." The NAD likened the context of Oracle's claim to a money-back guarantee, stating in its decision that just because an advertiser is providing a money back guarantee does not protect it from having to substantiate whatever claim it is making about its product in its advertising. The NAD went on to state that by offering the $10,000,000, Oracle was displaying the "utmost confidence in the truth in its "5x Faster claim."
This is yet another decision underscoring that claims come in all shapes and sizes. No matter what form the advertising takes, be it a "contest" or a Youtube video that doesn't even mention the product (see link below), the advertiser must still substantiate any claims that it communicates.
Read NAD's review of Youtube video advertising- NAD Reviews Viral Video Advertising
If you have questions about the IBM v. Oracle decision, or about any other advertising law issues, please contact Terri Seligman at (212) 826 5580 or email@example.com, or any other member of the Frankfurt Kurnit Advertising, Marketing and Public Relations Group.
Other Advertising Law Alerts
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017
FTC Announces Reforms to Its Investigative Process
Recently, the FTC announced a set of internal reforms intended to improve the process by which the Commission investigates unfair, deceptive and fraudulent business practices. The reforms relate to the Civil Investigative Demands ("CID") that the FTC's Bureau of Consumer Protection issues to request information from investigation targets.
September 7 2017