Analytics Firm Comscore Settles Fraud Charge with SEC

September 26, 2019

In the lucrative world of data analytics, few companies are more prominent than Comscore. The Virginia-based tech firm analyzes much of the country’s web traffic which then serves as a key reference for pricing online ads. Similar to the television ratings tracker Nielsen, Comscore measures how many people visit a website, the amount of time they spend on it, and other important metrics that can determine its popularity. As a result, the company’s data is vital for media companies and social networks that depend on advertising for the bulk of their revenue. 

But while countless websites rely on Comscore, that doesn’t mean everyone trusts the analytics firm completely. Over the years the company has received criticism for overinflating certain metrics and possibly providing inaccurate data to non-paying users. This week, however, Comscore’s biggest controversy came to light when the Securities and Exchange Commission (SEC) announced it had settled a fraud case against the company. According to the government agency, Comscore overstated revenue by $50 million from 2014 to 2016 by misreporting certain transactions as revenue generating deals. Along with reaching a $5 million settlement with the company, former Comscore CEO Serge Matta must personally pay millions in restitution and is banned from serving as an executive of a public company for 10 years. 

“Comscore and its former CEO manipulated the accounting for non-monetary and other transactions in an effort to chase revenue targets and deceive investors about the performance of Comscore’s business,” said SEC Enforcement Division associate director Melissa R. Hodgman. Although Comscore admitted to no wrongdoing when it reached a settlement with the SEC, the company has doubtlessly damaged its reputation as an accurate reporter of data. Nevertheless, Comscore remains the prime source for information on web traffic in the U.S. Only time will tell how the fallout from its SEC settlement will affect the firm’s day-to-day business, if it does at all.

Questions:

  1. What vital service does Comscore provide to websites?
  2. How do you think Comscore’s settlement with the SEC will affect its ability to do business? 

Sources: Adi Robertson, “Comscore, the Internet’s Traffic Judge, Settles Fraud Charges for $5 Million,” The Verge, September 24, 2019; Tom McKay, “Data Analytics Giant Comscore, Former CEO Settle With SEC for Cooking the Books,” Gizmodo, September 25, 2019.

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