QUESTION
We have had a major problem caused by a group that is spreading
misinformation about our company. They have made all kinds of claims about us,
all lies, saying that we discriminate in lending, do not hire minorities,
charge higher loan rates to minorities, and even have a health insurance plan
that reduces women’s health care. They are lying about much more. It hurts
because these are all lies.
The result of this barrage is that the news media got involved. After
that, local officials got involved. They are demanding that the CFPB get
involved, even though we have never had a fair lending issue and passed all our
fair lending examinations with no adverse findings.
Now, our company has seen a drastic drop in loan originations. Our
marketing department is small, and they have done what they can by issuing
press releases and setting up community meetings. We even outsourced our
response to an outside law firm to fight back. None of these options have
worked. The barrage keeps coming, and our loan officers are finding it
impossible to originate loans.
I realize that you may not have the magic recipe to stop this
onslaught. But maybe you could give us some suggestions that are outside
regulatory compliance. We know that you can help with insight and ideas that
might stem the tide.
So, our question is, how can we contain the spread of misinformation
about our company?
ANSWER
Thank you for your question. I appreciate the confidence you have in
me. Given the urgency of your question, I will provide some feedback, ideas,
and suggestions.
The fact is, dealing with the challenge of misinformation is really
not outside the purview of regulatory compliance. Of the many risks that a
financial institution faces, one of the most difficult to manage is reputation
risk. Indeed, the OCC lists reputation risk as among the top four risks associated
with corporate and risk governance. The other three are strategic risk,
compliance risk, and operational risk.
By “misinformation,” I mean the spreading by witting and unwitting agents
of false, inaccurate, or misleading information that is communicated regardless
of an intention to deceive. Typically, misinformation consists of falsehoods,
false rumors, insults, and even pranks.
Your question demonstrates how quickly and pervasively misinformation
can destroy the reputation of a company. Years of building up a company’s
reputation can be decimated in a matter of minutes due to social media and
other lightning-fast purveyors of information. A feeding frenzy targets the
institution, and although you may slow it down or sometimes stop it, the damage
is done and can last for many years.
Instead of getting into all the regulatory details, as it seems you
have that somewhat covered, I will provide the feedback that I believe will
help you in ‘real time.’ If you want guidance in evaluating your reputation
risk procedures, you can contact me to arrange a review.
I think you would be best helped by asking your crisis management team
a set of several important questions. Meet regularly to determine updates and
resolutions. Reduce to writing the actions taken and the results. You will
likely need them if a regulatory agency gets involved.
One of the difficulties in containing misinformation is the lack of
critical thinking skills of those exposed to or perpetuating the falsehoods.
So, I will mention the areas where the absence of such skills causes a “blind
spot” in their thinking. There are tons of books and manuals involving critical
thinking skills. Consult them. Courses and training are available, too. I will
highlight a policy and procedure model for you to consider. However, be sure
you educate yourself, your personnel, and your consumers on critical thinking
skills.
Procedural Model for Evaluating
Misinformation
In my model, I set forth the challenges as being threefold:
(1) the question: how to identify the problem;
(2) the critical thinking dynamic: what kind of thinking
causes the entrenchment of the misinformation; and,
(3) the responsive action: determining the actions
required to respond to the misinformation.
You cannot stop misinformation from being disseminated if you cannot
develop an understanding of at least these three challenges. Therefore, I
suggest that you immediately provide critical thinking skills training to your
affected personnel, especially those who have contact with the public. They are
your primary ambassadors to the community.
What follows are some suggestions using the question, critical
thinking dynamic, and responsive action model. Of course, you can design
your own model. I am only grazing the surface of the procedural methods needed
to organize a response to the damaging misinformation affecting your company’s
reputation.
Reputation Risk
Challenges to Controlling Misinformation
Three Primary Questions
1. Question: What is the misinformation problem, and where does it
originate?
Critical
Thinking Dynamic:
The exposure to
misinformation tends to increase people’s belief in its truth. The dynamic
causes a condition known as the illusory truth effect. This often occurs
because people generally forget the source but remember the information.
In fact, misinformation
often continues to influence people’s thinking even after correction, a
condition called the continued influence effect.
Responsive
Action:
Identify the
source(s) of the misinformation. Determine the extent of repeated exposure to
information, which includes false declarative statements and assertions.
2. Question: What can be done culturally and preemptively?
Critical
Thinking Dynamic:
Unfortunately, people
do not routinely track and evaluate the credibility of sources. However, when
they do, the impact of misinformation from less credible sources can be reduced
(but usually not eliminated). Unfortunately, many people lack “news literacy,”
that is, the ability to identify misinformation.
Online source
evaluations are challenging but can be taught. News literacy interventions can
help people to identify misinformation. This condition can be controlled by prebunking,
which is the alternative to debunking and should be the first strategic
maneuver.
Responsive
Action:
Encourage your
personnel and community to evaluate information as they encounter it, thereby
reducing the likelihood of mentally encoding inaccurate information.
Provide accurate
corrections on all media, especially social media, as soon as possible, because
doing so increases the quality of people's sharing decisions on the media
platform.
Corrections should
only come from an authorized spokesperson. Warn people that they might be
misinformed, thereby reducing their reliance on misinformation.
3. Question: What can be done to deal with specific pieces of
misinformation?
Critical
Thinking Dynamic:
In responding to
misinformation, beware of the overkill backfire effect. This occurs
where there are too many counterarguments, which, ironically, tend to strengthen
misconceptions.
Then again, the familiarity
backfire effect can also create havoc because corrections that repeat
misinformation can ironically strengthen misconceptions. Keep in mind that the
efficacy of corrections depends in part on the recipient’s motivation to
believe the statement.
If the correction
challenges a person’s worldview, it is usually less effective than one consistent
with a person’s worldview. Thus, there is another backfire effect, the worldview
backfire effect, where corrections to misinformation can ironically
strengthen misconceptions.
And, emotional language
influences the spread of misinformation and carries the corrective information
in the form of further misinformation. Thus, even if successful, updates to
factual beliefs may not translate into an actual attitude change.
Responsive
Action:
Fact-checking and
corrections may work, at least in part, but this does not mean fact-checking
can eliminate all inaccurate beliefs.
Corrections are
more effective if:
- In addition to providing a
simple retraction (viz., “not true”), a company proposes a causal alternative,
and generally if it provides substantive, relevant information;
- They are periodically
repeated;
- They involve multiple
relevant counterarguments and explanations;
- People are made to be
suspicious of the source or intent of the misinformation; and,
- They come from trusted
sources or highlight expert consensus.
Now, let’s turn our attention to a brief outline of how to handle
corrections and responses to the instances where misinformation adversely
affects your institution’s reputation.
Ten Ways to Promote Corrections to
Misinformation
1. The first response
is going to be the most important response. So, be very sure of the entirety of
the correction. Misreporting a correction has significant cascading effects
that often are abused by bad actors.
2. Encourage your
personnel to detect discrepancies in the correction to avoid inaccurate
presentations and understandings. For example, to encourage your personnel to
determine the accuracy of the correction, you should:
a. Promote critical
thinking and project confidence to the public;
b. Encourage people to
shift to analytical thinking; and,
c. Advise consumers to
follow sourcing Best Practices by showing them how to be their own fact checkers.
3. Assemble an
internal group to ensure that there is a process to review and publish a correction
to misinformation when it occurs. Follow the Best Practices approach to issuing
corrections (viz., accurate headlines, and avoiding defensive statements).
4. Do not refrain from
attempting to debunk or correct misinformation out of fear that doing so will
backfire or increase beliefs in false information. And, don’t worry too much
about a worldview backfire, despite issues around motivated reasoning and
ideology-based selective sharing of fact checks, and so forth.
5. Do not get into
defensively publishing simple negations. They are not effective. The public
must receive a clear explanation of (1) why the mistaken information was
thought to be correct in the first place, (2) why it is now clear it is wrong,
and (3) why your correction is accurate.
6. Make sure your
corrective claim is plausible. Do not confuse the issue with unlikely
scenarios. When using factual (i.e., causal) alternatives, the alternative
should not be complex, and it must have the same explanatory relevance as the
original misinformation.
7. Ensure the
misinformation is clearly and saliently paired with the correction. It should
be virtually impossible for the individual to ignore, overlook, or not notice
the correction. I know this seems counterintuitive, but juxtaposing the
correction with the mistaken information leads to people seeing the
inconsistency, which leads to them accepting the resolution. Repeat the
misinformation only once and directly prior to the correction. While
multiple repetitions of the misinformation prior to the correction should be
avoided, one repetition is beneficial to updating the mistaken belief.
8. Do not polarize or stigmatize
unnecessarily and be sure to use inclusive language.
9. Make a concerted effort
to translate complicated ideas into cogent, simple, and easily understood concepts
readily accessible to the target audience. This will facilitate the acceptance
of the correction as well as encode the memory of it.
10. Finally, and
importantly, use your critical thinking skills to develop a strong rebuttal
technique that will debunk attempts at misinformation. But also, think ahead! Be
sure to encourage prebunking to detect and, if needed, correct potential
challenges to your institution’s reputation.
Jonathan Foxx, Ph.D., MBA
Chairman & Managing Director
Lenders Compliance Group
