Responding to a hoax

Fake news flash: Sloppy journalism leads to an instant corporate crisis.

Fake news flash: Sloppy journalism leads to an instant corporate crisis.

A bogus press release tricked lazy journalists last month, an act of deception that's become all too easy in the rapid-fire, race-to-be-first world of online news and social media.

News outlets, including the Associated Press, and technology sites TechCrunch, Engadget, and The Next Web, reported virtually verbatim what they saw in the apparent release planted on PRWeb, which claimed Google was spending $400 million to purchase ICOA, a small Rhode Island firm that builds Wi-Fi hotspots. Several leading newspaper websites also reportedly carried the erroneous story. Never mind that the supposed press release contained misspellings, lacked comment from executives at either company, and listed no contacts for further information. Any experienced journalist would have raised a red flag. Plenty did. But not before the report had been widely disseminated, tweeted, and retweeted.

ICOA is a thinly traded OTC “pink sheet” stock. Its shares, which trade near zero, briefly blipped a few fractions of a penny higher, perhaps the objective of the anonymous fraudster if he was engaged in a “pump-and-dump” scheme.

Upon learning of the scam, Google and ICOA executives informed journalists the report was false. ICOA “never had any discussions with any potential acquirers,” the Wi-Fi company's CEO George Strouthopoulos told The Wall Street Journal, adding with a sense of humor, “I wish I was in conversation with Google, believe me, and I'd take much less than $400 million.”

PRWeb later stated the press release that had infiltrated its transmission system was fraudulent. The service's owner, Vocus, conceded the next day that it doesn't check the veracity of press releases it transmits.

As public relations professionals, it's incumbent upon us to be vigilant against such scams. They've happened before and will happen again.
  • We need to utilize reputable, reliable, and secure services to deliver our clients' news. PRWeb competitors Business Wire, Marketwire, and PR Newswire all told PRWeek they personally check with clients before disseminating their news releases. That's a good practice, though it's still possible for unethical individuals to manipulate even the best electronic information delivery systems.

  • When you know the story is dead wrong, be quick to notify news organizations of their error.

  • Though our lives are increasingly linked through social media, recognize that it truly can be an electronic rumor mill, as this case illustrates. Be particularly skeptical of tweets. Too many journalists spit out 140 characters or less as if they're talking to themselves rather than broadcasting on the web.

  • Contact the authorities quickly, just as ICOA called the Securities and Exchange Commission to halt trading in its stock.
This is serious stuff. Mark Jakob, a former employee of Internet Wire, received a 44-month prison term for using the service to issue a fraudulent press release claiming the SEC was investigating Emulex, its CEO had resigned, and the company was revising and lowering its latest earnings. When news organizations passed along the story Emulex stock collapsed, losing more than $2 billion in market capitalization before NASDAQ halted trading. That case of fraud in 2000 reminded many journalists to read press releases carefully and be certain to check their facts.

Some reporters in their rush to be first forget those fundamentals. Case in point, TechCrunch writer Darrell Etherington, who fell for the latest scam by transmitting the bogus release without hearing from either ICOA or Google. He had the audacity to update his inaccurate story by writing, “It turns out that a PR agency or some other individual gone rogue was dead wrong on this.” Of course, it was Etherington who was dead wrong.

AllThingsD.com's co-executive editor Kara Swisher came to the defense of public relations firms by tweeting, “hey TC, it was not a PR agency that was ‘dead wrong,' it was your ‘process' journalism (aka doing no actual reporting).”

That's one tweet worth retweeting!

Allan Chernoff is SVP and senior partner at Fleishman-HIllard

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