Business Wire Considers Legal Action Over April Fool's Hoax
By JOHANNA BENNETT
Dow Jones Newswires
NEW YORK -- It was meant to be part of an elaborate April Fool's Day joke: a
press release issued on April 1 over Business Wire by a group of online
investors reporting a nonexistent government contract with a make-believe
Internet company.
Business Wire isn't laughing.
The San Francisco-based company, which distributes corporate press releases
electronically, has threatened to take legal action against the group of
pranksters behind the fictitious WebNode.com, saying their gag has damaged
the wire service's reputation.
Company officials weren't specific regarding the nature of the legal action,
although an attorney for the company said it is "seriously" considering
filing a lawsuit. And at least one of the pranksters said he was recently
contacted by the Federal Bureau of Investigation.
'I can't discuss the details right now,' said Cathy Baron Tamraz, executive
vice president of Business Wire. 'Suffice it to say, our lawyers are
involved right now.'
But the gag's organizers, members of a loosely affiliated group of online
stock sleuths known as FBN Associates - Fly By Night Associates - said their
annual April Fool's Day hoax was their way of demonstrating how easily
investors can be taken in by Internet stock scams and that corporate press
releases should never be taken at face value.
'No one was hurt. We haven't taken anyone's money,' said Bill Ulrich, one of
the prank's organizers. 'We are just trying to help people to see how it
really works.'
The brouhaha over the WebNode.com spoof is just the latest in a series of
incidents in which online pranks, hoaxes and parodies have rubbed
corporations the wrong way.
Earlier this month, a Web page designer ran afoul of 3Com Corp. (COMS) after
publishing an online parody of an advertising campaign for the Palm V, the
company's new hand-held computer. The spoof, based on billboard and print
ads showing a tastefully posed naked woman holding the computer with the
caption 'Simply Palm,' has been removed from a Web site at 3Com's
insistence.
Pairgain Hoax Drew Attention To Online Scams
Meanwhile, U.S. authorities are still delving into the situation surrounding
Pairgain Technologies Inc. (PAIR), a small telecommunications equipment
company whose shares soared earlier this month after a hoaxer published a
fake merger announcement on a bogus Web page resembling a Bloomberg New
Service site.
Authorities are still uncertain whether the hoax was intended as a practical
joke or a way to manipulate Pairgain's stock. Either way, Bloomberg has
filed a lawsuit and U.S. authorities have filed criminal and civil charges
against a 25-year-old Pairgain employee alleged to have masterminded the
stunt.
To date, the Pairgain hoax has attracted the most public attention of any
online scam - both because of its elaborate nature and the way it
illustrated how readily the Internet lends itself to con artists and stock
manipulation.
Investment and legal experts often complain that small investors are too
willing to believe the information they cull from the Internet about public
companies. Looking for fast money and lacking good investment skills,
investors can find themselves falling victim to a number of frauds.
The problem has become so rampant that the Securities and Exchange
Commission now lists Internet fraud as among its highest priorities. Also,
the agency is admitting it needs more money and people to chase cybercrooks.
Prank Was Third In Group's Series
In many ways, the WebNode.com prank was just as elaborate as the Pairgain
hoax.
For the last three years, FBN Associates has pulled off April Fool's Day
pranks. Last year, for instance, the group created a Web site, complete with
humorous advertisements, dedicated to a fake Y2K company and posted a press
release about it on an Internet message board.
This year's prank also involved a Web site dedicated to a make-believe
company. And in what was billed as a 'real estate of the Internet' deal, the
bogus Safety Harbor, Fla., company claimed it had received a contract from
the government to raise $4 billion to set up a fiber-optic system for the
next Internet - a real-life project known as the Internet2.
The deal, which offered 40 million nodes - a point for data to travel along
the Internet - for $100 each, was publicized on an Internet message board
and in a Business Wire press release. A Jim Chefftell - an anagram for Jeff
Mitchell, one of the prank's organizers - was listed as a company contact
and an e-mail address was provided on the Web site.
The punch line came the next day when a message appeared on the WebNode.com
site revealing that everything has been a gag. But by then, more than 1,000
investors had e-mailed inquiries about the company, some asking about
investment opportunities. Also, Wired, a popular online news magazine, took
the press release as truth and published a story.
The magazine issued a correction the next day, congratulating the pranksters
and expressing regret that it had been 'suckered' by the gag.
'That was the way everyone should have responded,' said Mitchell.
Business Wire Sees Presence Of Malice
Business Wire doesn't see it that way.
While company officials don't deny the press release was intended as a joke,
they said the spoof wasn't obvious to those reading the press release. They
also claim the pranksters have continued to ridicule the news service on
Internet message boards and the WebNode.com Web site.
'It was a malicious attempt to mislead the public and in doing so has caused
significant damage to Business Wire's reputation,' said Roger Myers, an
attorney for the wire service.
Tamraz, the Business Wire executive president, said news reports have been
brought to her attention in the past regarding 'questionable' press
releases. However, this incident marks the first time - as far as she
knows - that the wire service has run a completely fabricated press release
about an entirely make-believe company.
Business Wire serves about 15,000 clients, charging a fee to disseminate
corporate press releases. The service's client list has grown in the recent
years, largely because of the explosion of the Internet and Internet-related
companies. As a result, Tamraz said, the company has started taking a harder
look at the type of information released over its wire service.
Clients sign documents attesting to the validity of the information in the
press release, as well as the identity of the person listed as a company
contact. Materials are also checked for problems such as libelous statements
and proper attribution, Tamraz said.
'This is an unusual situation for us,' she added.
But Mitchell and Ulrich, as well as their attorney, describe the gag as a
parody and insist that a reasonable person should have been able to figure
out the farce.
'The whole point of what we were doing was to alert people to what goes on,'
Mitchell said. 'Just as people bought the Brooklyn Bridge, the idea here was
that we were selling the actual Internet. If people could not figure out on
face value that this was patently absurd, then there is not much more to
say.'
-By Johanna Bennett; 201-938-5670; Johanna.Bennett@dowjones.com |
