Establishing a strong brand image is crucial for the long-term success of your business \u2013 but false statements can put this in jeopardy. This can result in loss of business opportunities, lasting reputational harm, and even expensive legal action.<\/p>\n\n\n\n
In this guide from Arag, keep reading to understand what defamation is, its consequences, and the steps you can take to help mitigate risks.<\/p>\n\n\n\n
Defamation is a civil offence that happens when someone makes a false statement against an individual or business. It can be categorised as either:<\/p>\n\n\n\n
A statement is defamatory if it has caused, or is likely to cause, \u2018serious harm\u2019 to a business. Defamatory statements are covered under the Defamation Act 2013.<\/p>\n\n\n\n
The effects of defamation will differ depending on your business structure.<\/p>\n\n\n\n
Incorporated companies must show that they suffered a serious financial loss as a direct result of the damaging statement. Whereas partnerships and sole traders can focus on reputational damage \u2013 which has a lower threshold.<\/p>\n\n\n\n
In some cases, businesses can also make a claim of malicious falsehood instead of defamation. This is often used when proving \u2018serious harm\u2019 is challenging.<\/p>\n\n\n\n
Unlike defamation, malicious falsehood requires the claimant to prove that the statement was false, made maliciously, and caused financial loss \u2013 but it doesn\u2019t require the statement to be defamatory in nature.<\/p>\n\n\n\n
This can sometimes be a more appropriate claim where reputational damage is implied but not easily proven.<\/p>\n\n\n\n
If someone makes a defamatory statement about you or your business, the first step is to collect evidence. This can include taking screenshots or saving emails that contain false and damaging statements.<\/p>\n\n\n\n
You\u2019ll then need to prove that:<\/p>\n\n\n\n
A lawyer can help assess whether the statement meets the legal threshold and advise on the best course of action. This could involve sending a cease-and-desist letter to the perpetrator before issuing proceedings.<\/p>\n\n\n\n
Defamation claims must be made no later than one year after the comment was first published, so it’s important to get advice from a professional as soon as you can.<\/p>\n\n\n\n
Crafty Creations is a bespoke jewellery business run by Emma. Emma relies heavily on word-of-mouth and local connections to grow her business. One day, she hears from a regular client that a competing local business has been telling other customers that Emma uses “cheap, imported materials” and “copies designs.”<\/p>\n\n\n\n
These claims are false, as Emma only sources ethical, high-quality materials and creates original designs.<\/p>\n\n\n\n
Customers who hear these statements may reconsider ordering from Crafty Creations, leading to a direct loss of income. As a sole trader, Emma’s personal reputation is linked to her business.<\/p>\n<\/div>\n\n\n\n
Nowadays, sharing information online can present significant risks for small businesses. Negative social media posts have the potential to cause reputational harm as these statements can be reproduced and shared with a large audience.<\/p>\n\n\n\n
As posts can be edited or deleted with ease, if you receive any defamatory statements over social media, you should:<\/p>\n\n\n\n
Although inviting customers to ask questions and leave positive reviews on your social media accounts can be beneficial to your business, it\u2019s important to monitor what\u2019s being published online.<\/p>\n\n\n\n
If you receive a negative comment about your business, you can engage directly with the commenter to try and resolve any issues. Doing this offline, or through private messages, can help prevent this from becoming a publicly visible complaint \u2013 or worse.<\/p>\n\n\n\n
The Daily Grind is a local coffee shop. When owner Zach found a scathing, false post on their Facebook page, he immediately took screenshots, reported it to Facebook, and adjusted his page settings to hide offensive content. He also made a note to block repeat offenders.<\/p>\n\n\n\n
While The Daily Grind encourages positive reviews, Zach knows the importance of monitoring online content. Instead of publicly engaging, he messaged the commenter privately to resolve the issue. By handling it offline, Zach protected his business’s reputation and prevented a public complaint from escalating.<\/p>\n<\/div>\n\n\n\n
False and damaging statements made about a professional or business, from within that business, can have long-term effects. Here are a few examples of defamation in the workplace:<\/p>\n\n\n\n
It\u2019s also important to note that your employees are an extension of your business, which means you can be held liable for something they say while doing their work. Additionally, if an employee publishes a defamatory comment about a third party, a claim could be brought against the employee or their employer \u2013 who is more likely to have the necessary finances to settle the eventual court judgment.<\/p>\n\n\n\n
Internal incidents should be investigated thoroughly and without unreasonable delay. You\u2019ll need to confirm exactly:<\/p>\n\n\n\n
If this information is confirmed, the business will need to issue a formal retraction or correction along with an apology to the person affected. The employee who made the statement may need to face disciplinary action, especially if the remark was made maliciously or recklessly.<\/p>\n\n\n\n
It’s a good idea to let your professional indemnify insurer know if there’s likely to be a claim as soon as possible. Legal costs and settlements might be covered, but always check your policy documents. <\/p>\n\n\n\n
Acting fast on issues like this can help resolve the situation, mitigate reputational damage, and reduce legal exposure.<\/p>\n\n\n\n
Businesses can help to lessen the risk of defamation by implementing clear communication policies, providing staff training, and reviewing content before it\u2019s shared internally or externally. <\/p>\n\n\n\n
Management can also encourage a workplace culture where concerns are raised through formal channels to help avoid informal gossip \u2013 which is often the source of false and harmful statements.<\/p>\n\n\n\n
Professional indemnity insurance may provide coverage for defamation claims, as well as other allegations of professional negligence or misconduct. This type of insurance can help provide financial protection in the event of a claim, covering legal costs and any damages awarded.<\/p>\n<\/div>\n\n\n\n
As one of the UK’s biggest business insurance<\/a> providers, we specialise in public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\n