Imitation, they say, is the sincerest form of flattery. Unless it comes in the form of a fake press release, then there is nothing but trouble for the companies that get spoofed.
Phony press releases, media kits, and other bogus company communications—issued mainly by stock manipulators, political pranksters, and activists—may not be an everyday problem, but it is becoming a more common one. And in an age of split-second “tweets” and speedily shared Facebook posts, inauthentic company messages are increasingly making their way past gatekeepers at distribution companies and Website content aggregators, and even into the articles of careless reporters.
The reputational damage to a company, and potentially harm to investors, comes quick and cuts deep. While once unsubstantiated rumors could be squashed early in the damage cycle, they can now proliferate globally with the click of a mouse. Whether it is greed or politics that guide the creation of false or misleading press materials, once they go public companies must have a plan in place to correct the record. The challenge is to squash false communications quickly, effectively, and without inadvertently fueling the misinformation.
The most shocking aspect of press release hoaxes is how brazen their purveyors are becoming. In November, a press release distributed by the widely used service PRWeb claimed that Google had acquired WiFi provider ICOA for $400 million, causing the penny stock to spike 500 percent before trading was halted and the Securities and Exchange Commission alerted.
It isn't the first time, nor will it be the last, that fake news caused trouble for companies. Other notable examples of hoax or truth-bending press releases:
· In 2004, a press release purporting to represent Emulex Corp. claimed its CEO was resigning in response to an investigation launched by the SEC. Multiple news outlets, jumped on the false story and the company's stock price plummeted by more than 60 percent, a $2.3 billion loss in market cap, within 16 minutes of trading. NASDAQ promptly suspended trading. The source proved to be an employee of a distribution service, Internet Wire, who made $250,000 by shorting the stock he manipulated. He was later sentenced to 44 months in prison.
· In 2010, General Mills fell victim of a release distributed through PR Newswire that claimed President Barack Obama demanded an investigation into its supply chain in response to product recalls.
· A press release claimed that Koch Industries would no longer support groups that dispute the veracity of global warming claims. It was later revealed that the release was the work of a group called Youth for Climate Truth.
· A coalition of Occupy Wall Street groups took credit for a fake Whitney Museum press release announcing that the museum was breaking ties with Deutsche Bank and Sotheby's, two major sponsors, to better serve the public instead of “the private interests of a small minority who possess a vast majority of the nation's wealth.”
· Last April, Bank of America was hit by a spoof release about a new campaign to seek public input on operational changes, putting business decisions in the hands of taxpayers. A related, also fake, Website attributed a damaging quote to CEO Brian Moynihan: “It's time to acknowledge that our Bank isn't working anymore.”
· A make-believe news release said that Peabody Energy, a Missouri-based coal company, had launched “Coal Cares,” an initiative to “combat the stigma of asthma among American children" and distribute branded inhalers to children living near its facilities. A group calling itself Coal is Killing Kids claimed responsibility.
“Beyond just fake press releases, it is always a good idea to be prepared for the broader scenario of misinformation that can harm an organization's reputation.”
—Travis Taylor,
Group Supervisor,
Fineman PR
· In 2007, a release that claimed to be from the U.S. Climate Action Partnership announced that Alcoa, Caterpillar, and DuPont were among the companies agreeing to cut their greenhouse gas emissions 90 percent by 2050.
· In 2009, IMAX shares spiked when an unauthorized press release claimed it was being acquired by Disney.
Proudly wearing their crown as the kings of fabricated news are the Yes Men, a high-profile team of activist pranksters. Last year, they were behind a fictitious announcement that General Electric would return its $3.2 billion tax refund to the U.S. Treasury. That particular gem was picked up by numerous news outlets, including the Associated Press.
In 2010, a dispatch from the World Economic Forum, complete with re-dubbed video, imaginatively quoted Goldman Sachs CEO Lloyd Blankfein apologizing for the collapse of the housing market. “It is by now universally understood that many of our institutions were directly responsible for the collapse of housing value, not to mention massive unemployment and misery, in the United States and much of the rich world,” the false video proclaimed. Blankfien never uttered the words and Goldman quickly provided evidence that the video was fake.
The Yes Men were also behind a spurious release claiming that Chevron would launch a new ad campaign urging oil companies to “clean up their messes” and that the U.S. Chamber of Commerce had a change-of-heart and would support legislation to reduce greenhouse gas emissions.
“It's not very difficult to write and send press releases that seem like they could be from a major corporation—especially since major corporations are constantly sending out releases, most of which are to some degree fiction themselves,” says Mike Bonanno, co-founder of the Yes Men with Andy Bichlbaum. “It becomes harder in the glut of misinformation and disinformation that is out there to really pick out fact. That, coupled with the downsizing of journalism in general, and less professionals out there paid to really investigate, results in it being pretty easy to game the system.”
FAKING IT
The following is an example of a fake company press release used as a form of political protest. We stress that the release below was fictitious and in no way represented the views of Bank of America.
Bank of America Announces “Your Bank of America” Campaign, Partnership with Taxpayers to Revamp U.S. Banking
Date(s): 18-Apr-2012 9:00 AM
As future clouds, opportunities arise for public synergy
CHARLOTTE, N.C.--(BUSINESS WIRE)--Apr. 18, 2012-- Bank of America today announced the launch of an unprecedented campaign to reach out to the American public for guidelines on how banking should happen. The campaign, Your Bank of America (www.yourbofa.com), leverages the American public's disaffection with today's banking practices into a full suite of real banking solutions.
“We may not have all the answers, but we're confident that those answers exist,” said Brian Moynihan, Chief Executive Officer of Bank of America. “We want to make sure the American people are well positioned to assert control and implement changes in the direction of banking, in the eventuality that such control becomes feasible.”
“Bringing in the public sector is a good strategy for earning buy-in at a difficult time for our industry,” said Moynihan. “But this is not just a PR campaign: as the public uses our new website to share ideas of how banks should be run, we will see many ideas that are quite far ahead of the market norm. Running a bank in a sane and common-sense way isn't rocket science—and that's something the customer knows best.”
The unprecedented Your Bank of America campaign and rebranding effort is being announced on April 18th to mark the 106th anniversary of the great San Francisco earthquake. After the earthquake, the fledgling Bank of America (at the time Bank of Italy) cemented its reputation as a trustworthy local institution by setting up a desk in the rubble to make loans to rebuild the city.
But Bank of America is no longer a local bank with local responsibilities. Bank of America currently controls more than 12% of America's retail bank deposits and 17% of all American home mortgages, and serves tens of millions of consumers and small businesses in over 150 countries, as well as 80% of the Fortune 500 Global Companies. The bank is the single largest funder of a number of major US industries, like coal, is the number one underwriter of global high-yield debt, and is the third largest underwriter of global equity, ever since its 2009 purchase of Merrill Lynch. But despite its size, Bank of America stock has lost 75-80% of its value in five years, returning weak profits and ending in a near-junk credit rating.
“Our rapid growth, allowed by a relaxed regulatory framework, has resulted in a disconnect with the core values that governed our early years,” said Moynihan. “As we face the prospect of public oversight in the not-too-distant future, this is a wonderful time to reappraise how we perform, and to try out new approaches—or, at least, sow the seeds that will help others to do so.”
The Your Bank of America campaign has been designed in a spirit of honesty and transparency. Levelling with the American people about the current status of the institution's finances is seen as a necessary first step in soliciting fresh new ideas for a way forward past any eventuality, including even receivership. “What do you want your bank to do for you?” “How should your bank's core business work?” and “How can your bank contribute to a fair economy for all?” are just a few of the questions the firm is now seeking to answer.
“Your Bank of America will be every bit as innovative, equitable, and sustainable as our new partners can make it,” said Matthew S. McSlatter, Director of Post-Receivership Partnership Planning. “We are confident that from the wise many will emerge a new model, a new ethic, and a whole new Bank for America.”
“2008 saw financial institutions receive a federal rescue package, then go on to repeat the same errors that had brought them to that situation in the first place,” said McSlatter. “We're confident that the American people could do better, whether given the receivership option or not.”
Source: Yes Lab.
Bonanno does stress that it is “important to distinguish between a hoax for financial gain,” as appears to be the case with the Google-ICOA release, and “educational fiction” of the Yes Men variety. “Those activities are protected free speech, if done right,” he says. “What we do is legal, and the companies risk a whole lot more bad press by [responding].”
Regardless of motivation, damaging information requires a response that is fast, accurate, and effective. “Beyond just fake press releases, it is always good idea to be prepared for the broader scenario of misinformation that can harm an organization's reputation,” says Travis Taylor, a group supervisor for Fineman PR, a San Francisco-based firm that specializes in crisis communications.
Taylor says the foundation for a face-saving response begins long before a specific threat emerges. That preparation requires a response plan that is continually updated. Among the components are delineations of responsibility and scenario testing. Messaging strategies have to be in place both internally (executives, boards, department heads) and for broader audiences (shareholders, investors, employees, media, and regulators).
Taylor says the first 48 hours have always been considered the most critical when responding to a crisis. The 24/7 news cycle and flourishing role of social media place an even greater value on immediacy. “Situations involving false information, where a company's reputation is at serious risk, can spiral out of control very quickly,” he says.
Gerard Corbett, CEO of strategic communications consulting firm Redphlag and immediate past chair of the 32,000-member Public Relations Society of America, agrees that the “age of ubiquitous communications” complicates the response to misleading information. As such, companies need to have constant monitoring in place, as many do as they seek to manage what is said in online reviews. “If something is put out falsely about your firm, you need to take action pretty quickly so that people don't overact,” he says. “If you sit on your hands for an hour or two that could mean that a big chunk of market value melts away.”
Corbett also stresses the importance of having a crisis plan. “In terms of SEC rules and disclosure requirements like Regulation FD, being prepared to deal with a crisis in real time is essential and a good practice from a compliance point of view.”
An action plan must involve executives in all areas of the business, he says. “You need to be able to communicate in a microsecond with the lawyers, accountants, HR department, and sales and marketing people.” That means investor relations, public relations, and other internal communicators must always be at the ready. “They have to be on call just like an emergency room doctor, prepared to deal with a crisis at any moment, and be able to access the C-suite on a moment's notice,” Corbett says.
The University of Southern California Strategic Public Relations Center's recent Generally Accepted Practices study, bears out the trend for communications is playing a larger role within companies and attaining board-level attention. In March, nearly 60 percent of companies responding to its survey said PR and communications staff report directly to their CEOs and COOs, a response to their evolving role within a company and the increasing need for transparency and brand protection.
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