Publisher Of Newsweek And IBTimes Denies Ad Fraud But 2 Top Execs Resign: Here’s Why This Is A Political issue

Publisher Of Newsweek And IBTimes Denies Ad Fraud But 2 Top Execs Resign: Here’s Why This Is A Political issue

The Chairman of Newsweek Media Group and the company’s finance director, his wife, have resigned after a regulatory investigation into fraud at the company, USA Today reported.

IBTimes.com, or International Business Times, the U.S. business news site of Newsweek Media Group, was one of two large media publishers to win a campaign to sell digital ads for the U.S. federal agency, the Consumer Financial Protection Bureau.

BuzzFeed News first reported the analysis of potentially fraudulent users done by Social Puncher, a consulting firm that investigates online ad fraud.

The Consumer Financial Protection Bureau was created in 2011 during the Barack Obama presidency as a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act. It acts as a consumer watchdog.

The agency was set up in the wake of the 2007-to-2010 subprime mortgage crisis to make sure it didn’t happen again. It protects consumers who keep their money in banks and credit unions, pay for goods and services with their credit cards, take out student loans and rely on loans to buy homes, according to Obama White House archives.

The Consumer Financial Protection Bureau’s ad budget was the subject of criticism from Republican lawmakers after the Daily Caller reported last year that it had awarded more than $40 million in contracts to a single ad agency, GMMB, which is one of the top Democratic media strategists, BuzzFeed reported. (A portion of money in those contracts was used to pay media outlets for advertising space, and was not kept by GMMB.)

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President Donald Trump recently tweeted that the bureau “has been a total disaster,” and installed his budget director, Mick Mulvaney, as acting director. The Trump administration has stripped enforcement powers from a Consumer Financial Protection Bureau unit responsible for pursuing discrimination cases, part of a broader effort to reshape an agency it criticized as acting too aggressively, Washington Post reported.

Neither the Consumer Financial Protection Bureau nor Washington, D.C.-based GMMB are accused of taking part in, or having knowledge of, ad fraud on IBTimes.com, BuzzFeed reported.

Many of the allegedly fraudulent ads may not have been viewed by legitimate consumers, according to Social Puncher. It says the Consumer Financial Protection Bureau ads were displayed to an audience of IBTimes readers in the U.S., England, India and Singapore that includes a significant amount of “cheap junk traffic with a share of bots.”

Newsweek bought the fake users because IBTimes.com was losing traffic from real readers, the report alleges. Instead, the traffic came from pop-up or pop-under browser windows on other websites where users could illegally download videos or other files.

Users often don’t see these automatic pop-ups, which can show up on a new browser window. The views that were counted on the pirated content websites were then “laundered” as IBTimes views, the report says.

A spokesperson for Newsweek Media Group told BuzzFeed News that the company does buy traffic but that it uses third-party platforms to verify its quality and denied fraud.

Investigators from the Manhattan District Attorney’s office raided Newsweek’s New York offices two weeks ago, taking computer servers as part of an investigation, according to The New York Post.

Following that investigation, co-owner Etienne Uzac and Marion Kim, the company’s finance director, resigned, Newsweek reported Thursday.

Here’s more from BuzzFeed. Story by Craig Silverman.

IBTimes.com, the publisher’s US business site, last year won a significant portion of a large video and display advertising campaign for the Consumer Financial Protection Bureau, a federal agency. Social Puncher, a consulting firm that investigates online ad fraud, alleges in its report that the ads were displayed to an audience on IBTimes.com that includes a significant amount of “cheap junk traffic with a share of bots.”

A Consumer Financial Protection Bureau spokesperson told BuzzFeed News the bureau is looking into the allegations raised in Social Puncher’s report.

“We take allegations of fraud very seriously. Acting Director Mulvaney is actively looking into the work done by GMMB, and these allegations (of ad fraud by IBTimes.com) will be investigated as part of that process,” the spokesperson said.

In a statement to BuzzFeed News, GMMB acknowledged that IBTimes.com was part of the media buy, but disputed the report’s estimate of the money spent.

“While we don’t provide specific details about our client work, many of the assertions in the report—including all of the numbers reported for the ad buy—are inaccurate,” the statement said.

A source familiar with the campaign said that sites were selected based on data obtained from a third party audience measurement and media planning platform.

When it comes to IBT’s fraudulent traffic practices, Social Puncher’s findings align with reporting from BuzzFeed News on IBT India, and with separate data gathered by Pixalate, an ad fraud detection company, and DoubleVerify, a digital media measurement company. (Social Puncher and BuzzFeed News previously collaborated on ad fraud investigations, but worked separately in this case.)

Read more at BuzzFeed.