How to Identify Fake Financial News

​Fake news has quickly become a common topic of conversation, but fake financial news has generated far less discussion.

​While leaders and even the press itself has been on a witch hunt for unreliable public information, financial misinformation and deception continues to be disseminated to unsuspecting readers. 

While few businesspeople doubt the existence of fake news in the financial arena, many believe it to be uncommon or limited in scope. They assume that the hard data typically referenced in financial news precludes it from being faked, and that any inaccurate news will be weeded out by major news sources to prevent it from gaining traction.

Even among savvy business owners and executive leadership, there is the perception that fake financial news only affects the stock prices of publicly traded companies. As a result, the effect of fake news on smaller privately held businesses is largely overlooked. 

Fake financial news does exist and does affect private businesses.

Students at Columbia and Yale have begun studying  how fake news affects financial markets and have concluded that smaller businesses are more heavily affected than their larger counterparts. While fake financial news has yet to be studied in the same capacity, its effects are likely magnified for small businesses.

Anton Gordon, a software developer writing algorithms to determine web content reliability explains,
“Fake news in the financial market has been a problem for a long time, we just didn’t call it fake news. For investors, it's information not based on conversation with management or ideas coming from a financial news blog that allows people to post whatever they want.”

As a result, business owners and entrepreneurs must constantly be on the lookout for fake financial news to ensure that strategic decision making is not influenced by speculative, deceptive, or unfounded financial news. 

​Types of Fake Financial News

​While some fake financial news is intentionally contrived to stir up the market, other kinds are a result of well-meaning speculation or logical market assumptions that do not end up coming to fruition. Fake financial news can rear its head on a national scale, within the framework of a single industry, or among a fierce competition pool. 

• General Business News
  • Interest rates
  • Foreign trade deals
  • Currency value
• Industry-Specific Information
  • Regulatory changes
  • Government incentives
  • Mergers and acquisitions
• Competitor Rumors
  • IPOs
  • New product releases
  • Product sunsets
  • Recalls
  • Financial difficulties
  • Layoffs
  • Criminal activity
  • Whistle blowers
  • Public scandal

Avoiding Fake News

Before the explosion of online news outlets and the ever-evolving definition of “journalism” businesspeople typically relied on the trustworthiness of the source to determine whether the news they were reading was credible. However, with the abundance of modern news venues identifying fake news has gotten more difficult. Fake financial news typically contains red flags, such as: 

1.Limited References

Minimal citations, or citations that are missing altogether are a clear indication that financial news may not be reliable. Reputable financial news articles typically contain links to other verified news sources (government resources, top industry publications, etc.) as well as supporting information from respected financial experts. While statistics can be falsified, references like expert opinions with working links bolster the authenticity of the article by providing supporting evidence for businesspeople to research.

2.Non-Comital Verbiage

Uncredited quotes or vague references to public policy, laws, or other recent news stories signal that information may not be reliable. Softer non-comital words like “think,” “believed to,” “supposedly,” “could,” or “might” also indicate that the news is speculative in nature rather than verified. Decoding fake financial news is as much about reading into what is not being said as what is being said.

3.Click-Bait Titles

Salacious titles are a hallmark of untrustworthy articles across all topics. Authors that aim for their financial news articles to go viral instead of altruistically informing business owners will often use titles that do not closely match the rest of the content to gain more readers.

4.Shock Tactics

Hyperbole and other forms of exaggeration are a shock tactic used to get people talking and sharing. These strategies are a clear sign that the financial news in question is not credible. Real financial news will rely on facts, figures, and charts to make key points instead of verbal embellishment.

5. “Too Good to Be True”

As the adage says, “If it’s too good to be true, it probably is.” Be wary of financial news that seems unbelievable. Even with positive financial news there may be contraindicators to consider as well, which will be outlined in trustworthy news articles. Balanced articles are the most credible.

6.Unsupported

​Someone must be the first to break a news story, but shortly thereafter other journalists and news outlets will begin reporting on the same information. If financial news is unsupported elsewhere (at least in the long run), it should not be considered dependable. While small details may vary, the bones of a financial news story should remain the same from source to source. For important breaking financial news, there should also be follow-up as more details become available and financial implications are further assessed.  

Fake financial news can drive strategic decision making and shape the competitive landscape. Whether this news relates to the broader business arena, a single industry, or specific competitors, business owners should approach financial news cautiously and analyze its validity. Strategic decisions should only be executed after the information is validated across key criteria.
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Our team remains objective and does not respond to the hype as give support to our clients. Will it is important to be diligent and not operate with “head-in-the-sand syndrome”, our accounting team stays alert for “real news”. If your team is unsure of who to believe, you are welcome to contact us with your questions.