'Newsweek' owner's top execs resign; company inflated users with pirated sites ads

[Len]

SAN FRANCISCO — The publisher of Newsweek and the International Business Times has been buying fake audience traffic in order to meet the requirements of a lucrative government advertising campaign, a consulting firm alleged. Also, two top execs at the company resigned.

Analysis of potentially fraudulent users, first reported by Buzzfeed News, came as the the Newsweek Media Group chairman and the company's finance director, his wife, stepped down after a regulatory investigation into fraud. 

IBTimes.com, or International Business Times, the U.S. business news site of Newsweek Media Group, last year won a significant portion of a large video and display advertising campaign for the Consumer Financial Protection Bureau, a federal agency that educates consumers about college tuitions and home loans, according to the report. 

But many of those ads may not have been viewed by legitimate consumers, according to a report by Social Puncher, a consulting firm that investigates online ad fraud. It says the CFPB 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 Media Group did not respond to a request for comment.

The fake users were bought because IBTimes.com was losing traffic from real readers, the report alleges. Instead, the traffic was generated via pop-up or pop-under browser windows on file sharing and pirated video streaming websites.

Often users don't see these automatic pop-ups, which can place on a new browser window.

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 any fraudulent practices. A CFPB representative told the outlet that it takes fraud accusations seriously and was investigating details raised by Social Puncher's report. 

The charge comes at a tumultuous time for Newsweek's publisher, which rebranded itself Newsweek Media Group after the International Business Times' parent bought the newsmagazine from IAC and took the magazine's name.


On Monday, BuzzFeed News reported that Newsweek Media Group's chief content officer, Dayan Candappa, was hired after leaving Reuters following allegations of sexual harassment. The company subsequently placed Candappa on leave pending an investigation, according to an article in Newsweek.

Two weeks ago, investigators from the Manhattan District Attorney's office raided Newsweek’s New York offices and hauled off computer servers as part of an ongoing 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.

Charges of padding online numbers with paid viewership echoes a growing concern about the veracity of online content and how rogue actors threaten to destabilize its legitimacy.

Facebook has come under fire for its role in allowing Russian hackers to fill unsuspecting users' news feeds with posts on hot-button social issues ahead of the U.S. presidential 2016 election. Facebook recently retooled its practices with an aim of prioritizing status updates from friends and family and has vowed to stop operators from using the platform to meddle in elections.

Last week, the state of New York's attorney general said it was opening an investigation into Devumi, a company that sells Twitter followers, likes and retweets to those looking to bolster their social media popularity.

After Twitter announced it would take action against Devumi's practice of helping users pad their accounts with fake fans, the New York Timesreported that celebrities ranging from singer Clay Aiken to TV host Lisa Rinna quickly lost thousands of Twitter followers.