How to deal with defamation of your business

If your business has been the subject of a negative and inaccurate statement, you will know how damaging this can be to your business in so many ways. It is particularly frustrating when it feels like you cannot do anything about it, because it appears online or is written in a review that can be widely seen.

The damage that can be done to your business as a result of such statements could be catastrophic. However, if you believe you have been defamed, there are remedies available to your business, both to remove the inaccurate statement, and to obtain compensation for the damage that has been inflicted.

In this blog, we look at what is classed as defamation, and the legal options for a business to address the damage caused.

What is defamation?

Defamation is a legal term which occurs when a statement is made that is untrue and unjustly harms the reputation of an individual, company, or other entity. There are two types of defamation: libel, which is where the statement is written or otherwise in permanent form; and slander, which is where the statement is made orally, or in another temporary form.

A statement is defamatory if injures the reputation of a business, and that statement has caused or is likely to cause serious harm to the reputation of the business.

If that statement is factually correct, it cannot be defamation. If it is clear that it is an opinion, then it is unlikely to be considered defamation unless it contains blatantly false information. For example, a bad review based on a person’s experience is not necessarily defamation, if this genuinely reflects their experience.

Can a business be defamed?

Yes, a business can be defamed if the defamatory statement causes serious harm to that business. This means that it has caused or is likely to cause your business serious financial loss.

In order to take any action, you will first need to prove that a defamatory statement has been made, and that it has reached third parties. For example, it has been published, or you can prove a statement has been orally made and others have heard this. 

Your business must be named, or easily identified in the statement, and it must have caused, or be likely to cause, serious harm to the reputation of your business, leading to financial loss.

For example, if a customer posts a review on a popular UK website, stating:

‘ABC Electronics sells faulty products and cheats its customers by refusing legitimate refunds. Their staff regularly steal customer credit card details.’

The statement is written and public, because it appears online.

The allegations are very serious and likely to injure the company’s reputation.

For a business to be able to prove defamation, the statement must be false and injurious to the business's reputation. But if the claims are true, it is not defamation, however unpalatable they may seem.

You will also need to show that the defamation has caused or is likely to cause, ‘serious financial loss’ as a direct result of the statement.

What constitutes serious financial loss depends on your business, and what damage has been caused. For example, if you are a small business and suffered the loss of a client that is key to your income stream, this may result in serious financial loss. If you are a large multinational corporation and lose one client, this may not be seen as a serious financial loss. Ultimately a judge will decide, but you should take legal advice from a specialist in this area who can assess this with you.

What are the remedies available to me if I believe my business has been defamed?

You should take advice from a specialist legal advisor immediately. The longer a statement is allowed to remain in the public domain, the more damage it can do.

The ultimate remedy is to take a claim against the person or entity defaming you in court, requesting an order that the statement is taken down, and if appropriate, that an apology is published, correcting the misinformation given. The court may also order an injunction to prevent any further negative statements, and may order that you are paid compensation for financial damage caused to your business’ reputation.

Before resorting to court action though, it is often enough that a ‘cease and desist’ letter is sent to the defamer from a reputable solicitor, warning them to take down or retract the statement they have made, or face an order for injunction and damages, with costs. This will often give speedier results than applying to court.

If you have been defamed online, for example by a false review, you may also be able to request that the platform hosting the review removes it.

However, while it is recommended to follow this course of action in any event, it can be slow and is not guaranteed to have results. Many platforms, such as Google, or Trustpilot, have their own guidelines on what should be removed and when. They may be reluctant to get involved in a genuine dispute between a business and customer, so you will need to convince them that a review is genuinely false, and contains harmful or illegal information.

How do I take action against someone who has defamed my business, and what might this cost?

It is always easier, and less stressful, to try to resolve the problem through agreement. We will first ask the defamer to agree to voluntarily remove the material. If serious financial damage has been caused, we will ask for recompense to be paid voluntarily on your behalf as appropriate, and work to negotiate settlement terms for you without resorting to court.

Another option before taking any court action is to ask the defamer to engage in alternative dispute resolution (ADR), such as arbitration or mediation.

If this is not successful, then we can issue a claim on behalf of your business against the defamer in court. This must be brought within 12 months from the date of publication of the defamatory statement.

As the court has wide powers in defamation cases to order anything that is necessary, as well as taking down the offending statement and preventing further publication, the court can also make an order for damages, to compensate your business for financial loss the defamation has caused. These can be specific damages, if you can show these have occurred. For example, if you can show that a contract worth £100,000 per annum has been lost. The court can also order general damages, in order to compensate for injury caused to your reputation. These are harder to quantify, as this involves proving that you have suffered serious financial loss through the reputational harm you have suffered. There needs to be a clear causal link between the defamation (i.e. the statement made against you), and the actual financial loss you have incurred.

How we can help

A false statement made against your business can quickly circulate, especially with online reviews and social media, and can have a catastrophic effect which you might feel powerless to stop. However, there are remedies and actions that can be taken, both to stop the statement circulating further and to compensate you for loss of reputation and financial damage. Our solicitors will work with you to minimise damage as soon as possible, and to obtain compensation for false claims made against your business.

For further information and assistance, please contact a Legal Adviser in our Dispute Resolution team in York on 01904 624185.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.