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Protecting the Reputation of Your Business

As one of the key employees at your firm, you know the value of establishing a solid reputation in the industry. Once that reputation is tarnished, it may take years to recover—if ever. For instance, suppose you produce a product and your competitor starts a rumor that your product is defective. In that case, your sales are likely to suffer, even if the rumor is false.

Consider this: Depending on the circumstances, you may be able to strike back with a lawsuit for business defamation. Although a business generally is allowed to assert that its product or service is superior to another, it is not permissible to knowingly make false statements of fact about a competitor's offerings.

These defamation problems have been compounded by the widespread use of the Internet. Competitors and other parties can communicate via web sites, e-mails, blogs, chat rooms, bulletin boards and the like. In fact, it's difficult to even monitor all the chit-chat about your firm and its products or services. Besides checking references through search engines on a regular basis, you might subscribe to an online service that will provide you with monthly updates.

If you find out that a competitor is spreading false information about your products, you may have a legal course of action. First, you must demonstrate that the information is actually false. It is not enough to show that a competitor is merely using “puffery” by comparing their product to yours. Second, you must document a drop in business attributable to this false information.

In some cases, false information may not be related to your product but rather to your business finances. For example, it is not uncommon these days for rumors regarding bankruptcy to circulate. These rumors could be based on something as minor as a bounced check. It is important to act quickly to dispel such a notion.

What can you do? You may want to get in touch with all your major suppliers and clients. You also might consider bringing in public relations experts. The point is you may be able to nip the problem in the bud if you act quickly enough.

At the same time you are setting the story straight with suppliers and clients, you can request a retraction from the guilty party through your attorney. It may be possible for both sides to negotiate an amicable settlement. Otherwise, be prepared to document your losses. As part of the process, you should keep track of client inquiries regarding the false information. This information may be critical to proving your case in court.

Conversely, do not make any unfounded accusations concerning your competitor's products or business. While you are free to promote your products above your rivals, you cannot spread lies that do harm. Err on the side of caution.

 

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