Jan
18
Six weeks ago, mild-mannered, 28-year-old Edgar Maddison Welch, father of two, entered a Washington D.C. pizza parlor and fired three rounds from an AR-15-style rifle. His objective was to liberate children he believed were being held captive there by a ring of abusive pedophile conspirators.
Fortunately, no one was injured. Welch’s rounds struck only a wall, a desk, and a door. Failing to find the nonexistent captives, Welch allowed himself to be arrested without further incident.
What makes this case uniquely frightening is what underlay Welch’s motivation: He had found and, he thought, confirmed his “information” online.
There’s nothing new about misinformation. It has been around as long as speech itself. Sometimes its results are costly but, ultimately, merely amusing, as with the Cardiff Giant. Sometimes its results are arguably more annoying than amusing, such as persistent rumors about Area 51 or a faked lunar landing. Sometimes its results are tragic, as with the above-referenced “Pizzagate” or, for a far earlier example, the Salem Witch Trials.
But today, fake news has attained unprecedented distribution and, with it, power to cause considerable harm, from Pizzagate to allegations of influencing a presidential election.
Financial institutions in particular need to beware fake news. As banking increasingly becomes an online service, one little rumor can be all it takes to inflict considerable damage on reputation and, therefore, the bottom line. Consider how the social media lumped banks in with Fannie Mae, Freddie Mac, and AIG.
In a broader sense, fake news can harm the economy at large. In his book On Rumors: How Falsehoods Spread, Why We Believe Them, What Can Be Done, Cass R. Sunstein writes:
In the economy, rumors can fuel speculative bubbles, greatly inflating prices, and indeed speculative bubbles help to account for the financial crisis of 2008. Rumors are also responsible for many panics, as fear spreads rapidly from one person to another, creating self-fulfilling prophecies. And if the relevant rumors trigger strong emotions, such as fear and disgust, they are far more likely to spread.
A number of factors account for fake news’s increase in potency:
• In a social media age, information and misinformation alike can reach millions within hours.
• Website owners are not legally liable for content uploaded by outside parties.
• Search engines learn and play to individual proclivities, creating a feedback loop that reinforces motivated reasoning rather than challenges or informs.
• Since news is largely market-driven, content that an audience willingly consumes can be a safer marketing bet than straight news. This is especially true for websites whose advertising revenues depend on traffic, since fake news often proves better clickbait than real news.
Not to be overlooked is the fact that it can be no small challenge to tell satire apart from genuine, extreme views. In the days of printed editions only, subscribers understood that the likes of The Onion and The Borowitz Report were not to be taken seriously. With the phenomenon of social media sharing, anyone can happen upon an out-of-context Onion or Borowitz excerpt and take it at face value. Indeed, Poe’s Law states that
“… without a clear indicator of the author’s intent, it is impossible to create a parody of extreme views so obviously exaggerated that it cannot be mistaken by some readers or viewers as a sincere expression of the parodied views.”
So it’s no wonder that fake news is, well, in the news.
As one who gratefully makes his living in the digital payments industry, not to mention as a human being, I care about how digital media are used.
So should we all. As the financial services industry increasingly segues into a digital business, it increasingly becomes a potential sitting duck for misinformation. There is a need for all of us to remain alert to pseudo facts as they emerge, and to have solid procedures in place to dispatch them as quickly and credibly as possible.