The threat of fake news today reaches far beyond the political arena, as Americans say that fake financial news is affecting their ability to make retirement, investment, and health care decisions.
In a recent AICPA survey of 1,018 adults, 58% of respondents said that fake financial news is a serious threat to their financial decision-making. One-third of respondents (33%) classified the threat as “very serious.”
“It’s more important than ever to verify sources, check the facts, and if you’re still not sure, speak to someone you trust before making any financial decisions,” said Susan A. Speirs, CPA, CGMA, a member of the AICPA National CPA Financial Literacy Commission. “As individuals we need to take back the responsibility of ‘fact checking,’ if you will, and be the drivers of our own financial decisions.”
However, consumers feel pressured to act quickly when faced with breaking financial news, which may make them less likely to carefully evaluate the news they receive. More than three-quarters (77%) of survey respondents said it’s important to make financial decisions quickly when new financial news becomes available.
“Even though we live in a fast-paced environment, we need to take time to look at the future implications of the financial decisions we’re making,” Speirs said. “Small changes to our individual financial pictures can either pay large dividends later or leave us in sorry financial shape.”
Fake financial news has drawn the attention of the SEC. On April 10 the regulator announced enforcement actions against 27 individuals and entities that it said were misleading investors into thinking they were reading unbiased, independent analyses on investing websites. Instead, the SEC said, writers were being secretly compensated for touting company stocks.
“Stock promotion schemes may be conducted through investment research websites,” Lori Schock, director of the SEC’s Office of Investor Education and Advocacy, said in a news release. “Investors looking for objective investment information should be aware that fraudsters may use these websites to profit at investors’ expense.”
The AICPA poll showed 63% of Americans believe the spread of fake news makes it more difficult to make financial decisions, and more specifically, the following types of financial decisions:
- Health care decisions (44%)
- Investing in the stock market (40%)
- Retiring (36%)
- Buying or selling a house (35%)
- Starting a business (35%)
- Changing jobs (29%)
Most Americans don’t see the problem of fake financial news fading away anytime soon. Fifty-one percent of survey respondents said they believe fake news will become more prevalent in the next one to two years. Only 14% expect it to become less prevalent, while about one-third—32%—believe it will remain the same.
The AICPA National CPA Financial Literacy Commission offers the following advice to help consumers identify fake news:
- Look for telltale signs of a hoax. If a headline makes a questionable claim, or there are grammar errors and typos in the article, this should give you pause. If you’re unfamiliar with the source, research it and read other articles from that source. Investigate the author. Look around for reports from other sources that substantiate the claims.
- Ensure the news came from a legitimate website and not a “spoofed” or counterfeit website designed to resemble a real site.
- Watch out for sponsored content and advertorials. While these articles can look just like a standard news article, they are not part of a news organization’s editorial content and are used to sell products.
- Distinguish between fake news and satire. Do your research to learn if the source is known for spoofs—especially if the news was shared on social media rather than a website.
- Do your research prior to making investment decisions. While your gut may tell you to react quickly to breaking stock market news, consider that most investment plans are designed for the long term. Do your due diligence, and if you have an urgent financial question, ask the Money Doctors—a panel of qualified CPAs who hold the Personal Financial Specialist (PFS) credential for comprehensive financial planning.
—Lea Hart is a freelance writer based in Durham, N.C. To comment on this article, email editorial director Ken Tysiac.