The publishing group behind both Newsweek and the International Business Times (IBT) is being accused of engaging in a massive online advertising fraud scheme that ultimately bilked American taxpayers out of tens of millions of dollars.
Social Puncher, a consulting firm that investigates online advertising fraud, alleges in a new report that both Newsweek and IBT directed "cheap junk traffic with a share of bots" to its websites in order to inflate its readership numbers – procuring falsified data that it then used to secure a major advertising contract with the United States government.
These shady dealings were the subject of criticism and scrutiny by Republican lawmakers last year, as this contingent reportedly told The Daily Caller that the Consumer Financial Protection Bureau (CFPB), a federal agency, had awarded more than $40 million in government contracts to a single advertising agency, known as GMMB.
GMMB, according to reports, just so happens to be one of the top Democratic media strategists, which suggests that at least some this $40 million lump sum of taxpayer dollars was used to push the leftist agenda online.
"We take allegations of fraud very seriously," a spokesman from the CFPB reportedly told BuzzFeed News. "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."
Newsweek, IBT procured "fake traffic" to boost ad revenues, pad dwindling readership numbers
To be clear, neither the CFPB nor the GMMB are being accused of taking part in, or even having knowledge of, the advertising fraud that allegedly took place at Newsweek and IBT. It is these two news agencies that are the target of the accusations, which is already causing a ripple effect among its top brass.
Two executives at the two outlets have already resigned, reports indicate. These include both the chairman and company finance director of Newsweek Media Group along with his wife.
What's already been revealed is that both Newsweek and IBT "laundered" viewership traffic from pirated movie and TV show websites. According to the allegations, both websites have seen dwindling readership, so they apparently utilized pop-up and "pop-under" browser ads on other websites to make it appear as though they had more traffic on their own websites than they actually did.
In other words, web traffic that was actually going to pirated content websites was falsely attributed to both Newsweek and IBT, according to the allegations. If unequivocally proven, it could spell disaster for the two news outlets, which have an extensive track record of publishing fake news content.
Newsweek Media Group insists, however, that the claims being made against it are false. It cites the claims by BuzzFeed News as being "unethical," and says the news group "distorts the truth."
"The company received a fraction of the revenue figure stated in the report, and more than half of the campaign involved display ad formats, not video, as was wrongly reported," Newsweek claims.
This comes just two weeks after investigators from the Manhattan district attorney's office raided Newsweek's New York offices, seizing computer servers and other potential evidence associated with an ongoing investigation against the shady news outlet.
Reporting by Newsweek's own journalists, it turns out, reveals that the Internal Revenue Service (IRS) filed about $2 million worth of tax liens against Newsweek's co-founders. Newsweek freelance writers apparently told BuzzFeed News that they often had to wait several months in order to be paid.
"The fact that they have been engaging in this really unsavory stuff does not surprise me at all," a former top-level editor for IBT reportedly told BuzzFeed News. "They are being so reckless that you worry about people's jobs and the brand."
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