In a recent American Institute of CPAs (AICPA) survey of 1,018 adults, 58 percent said fake financial news is a serious threat to their financial decision-making. A third classified the threat as “very serious.”
“Having accurate, reliable financial information is the basis for deliberate and rational decision-making,” Greg Anton, CPA, CGMA, chair of the AICPA’s National CPA Financial Literacy Commission, said in a prepared statement. “With few exceptions, making snap financial decisions is usually not a good idea. There is a fine line between reacting and overreacting, and Americans should proceed cautiously until they’re able to parse the facts.”
But more than 77 percent of respondents said it’s important to make financial decisions quickly when new financial news becomes available, and 40 percent said it’s “very important” to act fast. Therein lies the problem.
As a result, 63 percent said the spread of fake news has made it a lot harder to make critical financial decisions. Specifically, they’re having a tough time with decisions about:
- Health care (44 percent)
- Investing in the stock market (40 percent)
- Retiring (36 percent)
- Buying or selling a house (35 percent)
- Starting a business (35 percent)
- Switching jobs (29 percent)
“Financial decisions around health care, investments, and retirement can have serious, long-term implications. It can be difficult enough to understand the financial impact of proposed changes in laws and regulations without having to deal with a sea of disinformation,” Anton said.
Most Americans don’t see fake financial news fading away anytime soon. More than half (51 percent) said they believe it will become more prevalent in the next year or two. Only 14 percent expect it to become less prevalent. And 32 percent said they believe it will remain the same.
The AICPA National CPA Financial Literacy Commission offers the following advice:
1. Do research before making an investment decision. Quickly reacting to market-moving news – real or fake – can be tempting, but most investment plans are designed for the long term. If you have a pressing financial question, ask the Money Doctors – a panel of qualified CPAs who have attained the Personal Financial Specialist credential for comprehensive financial planning.
2. Be suspicious of headlines making outrageous claims and articles with incorrect grammar and multiple typos. Always research the source if you’re unfamiliar with the outlet and read some of their other articles. Look into the author and their sources to confirm that they are authentic. Inadequate evidence or extensive use of unnamed experts may suggest a fake news story. Always corroborate the story with other reports.
3. Watch out for website spoofing. Fake financial news articles published on these websites have the appearance of being from a credible source, but are actually designed to mislead readers.
4. Scrutinize sponsored content and advertorials. These articles are often designed to look like reported content to sell products, but are actually outside of a news organization’s editorial content.
5. Don’t fall for a prank. Fake news can sometimes be hard to tell apart from humor or satire and many people can be misled. Check to see if the source is known for parody and the article is a joke – particularly if you see it shared on social media rather than on the source website.
CPAs, Fake News, and Financial Literacy