Deceptive Claims using Fake News Advertising: The Impact on Consumers

Abstract

Fake news advertising, advertising that mimics legitimate news articles, can be harmful if it misleads consumers to take actions they otherwise would not have taken (e.g., purchase an inferior product). However, little is known whether fake news ads bring in new customers or are merely viewed by people already in the market for the advertised products. Exploiting an FTC enabled shutdown of fake news advertisements for various products such as acai cleanses and teeth whiteners but where the product sites continued to remain operational, I identify the extent of consumer interest in the presence and absence of fake news advertising. The findings indicate interest wanes after the shutdown of fake news advertising, but there is some substitution by consumers to other channels such as regular advertisements.