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Thought leadership piece: The risk of false information for your business and how you can prepare for it

While we have grown accustomed to false information posing difficulties for governments around the world, it is also increasingly being used to disrupt financial markets and negatively influence consumers. TRi Facts looked at how false information in the corporate environment has grown, and how companies can protect themselves against it.

While we have grown accustomed to mis- and dis-information proliferating our news consumption and social media streams in terms of politics and current affairs, companies are unaware of the major risks it poses for their bottom line.  

Misinformation is false information spread without the intention to cause harm, while disinformation is false information intentionally spread with the purpose to cause harm.

Not only does fake information diminish the trust consumers have in a business, but it also growingly threatens a company’s profitability and can even influence financial markets.

There are multiple effects that false information can have on companies

Share prices have repeatedly been tampered with using false information, and major news outlets often fall victim. Reports of corporate take-overs or CEOs embroiled in controversy can lead to major volitation in financial markets. For example, in 2019 the United Kingdom-based Metro Bank fell victim to false social media activity questioning the bank’s financial health which led to thousands of customers lining up at the bank’s branches in an attempt to withdraw their savings¹.

But false information can also erode trust in a business, leading to it losing several consumers. For example in 2017, United States-based coffee retailer Starbucks was hit by threats of boycotts when a fake social media post were doing the rounds, alleging that it was giving free drinks to undocumented immigrants². A similar incident took place a year later when a false claim alleged Starbucks was giving free drinks to consumers of a certain race only³.  

False information can also be used to drive away customers from a business, or organisation. For example, a number of articles with false information alleging that an Indian restaurant was selling human meat, were published on a website in London in 2017⁴. This led to revenue falling by half, forcing the owners to even cut the hours of employees to save costs. The owners also experienced several threats from members of the community.  

The internet analysis firm MOZ⁵ found that a business is at risk of losing 22% of customers if there is just one negative article about them on the first page of the business’ internet search results. This is regardless of whether the article is false or not. If there are four or more negative stories found on the first page of results, the figure of potential customer lost balloons up to 70%. 

During the Covid-19 pandemic, pharmaceutical companies such as Pfizer and Johnson & Johnson also saw first-hand how misinformation or disinformation campaigns increase vaccine hesitancy and even lead to instances of sabotage. In Wisconsin in the United States, a pharmacist deliberately destroyed 500 vials⁶ of a Covid-19 vaccine because he believed it could harm and change people’s DNA.

Similar instances have been reported worldwide, with telecoms companies having to protect cell towers and other digital infrastructure against vandalism from community members. In January, three cell phone towers were burnt down in KwaZulu-Natal⁷, South Africa, due to the spread of false information that 5G causes cancer and other damage to human brains.

The growing industry to create false information  

A 2021 PwC report⁸ found that the use of false information in a corporate setting is a sophisticated enterprise with organised crime making use of disinformation techniques to negatively influence companies. Internet users are able to pay websites to write and distribute false stories to hurt companies for less than $65.  

Buzzfeed News reported⁹ that websites exist with the sole purpose to allow users to create their own “prank” or fake stories. It takes users just minutes to write the fake story, add an image and share it on social media. And on social media, users are often unable to distinguish between what is a real news story, and what is a false news story.

These articles garner more than 13 million interactions on Facebook alone, Buzzfeed News reported. They also often make up the top news stories on the social media giant’s platform.

A 2019 MIT study¹⁰ found that false information spreads faster and further than true content, often because it evokes bigger emotional responses. False news stories have been found to reach their first 1500 people six times faster than real news stories and are 70% more likely to be shared than real news stories.

In its report¹¹, PWC acknowledged that certain businesses and organisations are more susceptible to targets of disinformation campaigns than others. These include chief executive officers of companies who are well known or have a large social media presence, organisations with strong vocal stances on controversial issues, companies about to be listed on a stock exchange or engaged in a merger or acquisition, or a company that is being rebranded or reorganised. Furthermore, relatively new companies that are experiencing a surge in demand for a service or product are also susceptible to false information attacks.

Five ways to combat false information

1)    Identify it quickly

One of the quickest ways to address the spread of false information is to identify it quickly and address it before it starts to spread on social media. This can be done through social media posts indicating the false information being spread, or blog posts on the company’s website.

2)    Establish clear responsibilities

Whenever false information is spotted, a company should already have established clear roles and responsibilities on how the organisation will respond to it. Establish who will make the decisions on how to respond, and who will do what and by when.

3)    Monitor the social media landscape

The ability to address false information before it spreads means that companies will have to monitor the social media landscape for the spread of any potential false information. This can be done through alerts on Google, Twitter or Facebook whenever your company is mentioned.

4)    Build relationships with stakeholders

Trust is also a key tool in fighting false information. Companies need to make a clear list of their stakeholders and communicate with them on a regular basis so that they have a relationship with the business and know who to contact or which website to visit when in doubt of information being received.

5)    Train both stakeholders and employees to spot false information  

The key to battling false information is for both stakeholders and employees to be able to identify and differentiate between what is trustworthy information, and what might be false. Training is therefore key to help the stakeholders identify false information and to help them in what they should do when they identify false information in relation to the company.

 

Contact TRi Facts to support your business to reduce the risk of false information.

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References

  1. https://www.wired.co.uk/article/metro-bank-share-price-whats-app-hoax
  2. https://www.businessinsider.com/fake-news-starbucks-free-coffee-to-undocumented-immigrants-2017-8?IR=T  
  3. https://www.nbcnews.com/business/business-news/trolls-spread-hateful-fake-starbucks-coupon-n867501
  4. https://www.standard.co.uk/news/london/new-cross-restaurant-hit-by-fake-news-story-claiming-it-served-human-meat-a3541956.html 
  5. https://moz.com/blog/new-data-reveals-67-of-consumers-are-influenced-by-online-reviews 
  6. https://abcnews.go.com/US/pharmacist-sabotaged-vaccines-thought-unsafe-police/story?id=75019776 
  7. https://businesstech.co.za/news/telecommunications/459524/cellphone-towers-being-burnt-down-in-south-africa-over-5g-conspiracy-theories/
  8. https://www.pwc.com/us/en/tech-effect/cybersecurity/corporate-sector-disinformation.html
  9. https://www.buzzfeed.com/craigsilverman/anti-trans-hoaxes-on-fake-news-websites 
  10. https://mitsloan.mit.edu/ideas-made-to-matter/study-false-news-spreads-faster-truth
  11. https://www.pwc.com/us/en/tech-effect/cybersecurity/corporate-sector-disinformation.html