GE hoax about its taxes won't hurt business
GE hoax, devised by a group of imposters who sent out a fake press release, tricked the Associated Press and Dow Jones news wires into publishing an incorrect story about how GE would give a $3.2 billion tax refund to Washington. Can the scammers behind the GE hoax hurt business?
General Electric is the latest big corporation to have its reputation attacked by the Yes Men, a group of activists intends to humiliate corporations by posing as their leaders. GE is big and strong enough to deflect the hit, and the extent of its damage may depend on whether the giant company decides to fight back.
The Yes Men helped the group US Uncut, which goes after corporate tax evaders, send a phony press release to media outlets on Wednesday that said GE was giving a $3.2 billion tax refund back to the US Treasury. At least two news outlets, the Associated Press and Dow Jones, fell for the prank and briefly posted stories on the matter. GE’s stock, which dropped 14 cents a share after those stories, but began to recover after the AP retracted the story. At the end of trading Wednesday, it was down just 7 cents. But the GE hoax isn’t likely to have any lasting effect on business, says one expert.
“A company and a brand that is as big and powerful and diversified as GE is not going to be damaged by something like this,” says Gene Grabowski, senior vice president at Levick Strategic Communications in Washington.
The fake press release came after GE had faced some criticism following a March article in The New York Times that said the company would receive a $3.2 billion tax benefit.
The Yes Men hoax brings the issue of corporate tax benefits back to the public’s attention, and strengthens the image of the Yes Men, says Mr. Grabowski. The group has been scamming the press for more than 10 years, targeting groups like ExxonMobil, the Republican Party, and the World Trade Organization.
For a business to suffer financially from a hoax, it would have to meet two criteria, Grabowski says: The business must already be vulnerable for some reason, and it must overreact to the prank.
As long as GE doesn’t respond too strongly – so far it has just published a list of facts about its tax status – it should be fine.
Last year, a fake press release targeting General Mills duped Dow Jones, The Wall Street Journal, and Fox Business Network. The outlets briefly published stories about how the food manufacturer was under federal investigation in the wake of food recalls, but the story didn’t seem to affect the company’s stock.
But some companies smacked with propaganda haven’t been so fortunate. In 2000, a fake statement about Emulex, a fiber-optic equipment maker, said that the company was reducing its earning statements. Bloomberg News published the story, and Emulex’s stock dropped by 62 percent in an hour.
“If I were advising GE on this, I wouldn’t get too aggressive about calling attention to this, it will probably die pretty quickly,” says Bob Oltmanns, the president of the Pittsburgh-based public relations consultancy OPR Group. “It's probably worth a statement, not even a press release."
“AP is the one with the bigger problem,” Mr. Oltmanns says.
But even the Associated Press may not lose the public’s favor, says Kelly McBride, a senior faculty member for ethics at the Poynter Institute in St. Petersburg, Fla. “The public is so accustomed to bad information getting out that it’s not as damaging as it used to be.”
Reporters could be more prone to fall for fake press releases nowadays because it’s easy for the prankster to make them look real, Ms. McBride says, and journalists are often too busy to check facts as thoroughly as they should, Grabowski says.
[Editor's note: An earlier version of this story misnamed Fox Business Network.]