In business, reputation is everything: it can mean the difference between a company surviving or not. In such a context, the fact that any individual armed with nothing more than a smartphone can leave false reviews online and/or make spurious accusations on platforms such as YouTube and Facebook means, to an extent, that a company’s prosperity is at risk from such individuals. The law relating to defamation, malicious falsehood and certain statutory protections may assist in protecting reputation.
1. Defamation law
Defamation law is the primary legal recourse for protecting reputation against false statements. It encompasses both libel (written statements) and slander (spoken statements). For a corporate entity to succeed in a defamation claim, the following elements must be established:
- The statement is defamatory: The statement must be shown to lower the claimant in the estimation of right-thinking members of society generally, leading to serious harm to reputation. For companies, the threshold is a financial loss rather than emotional distress.
- Identification: The statement must refer to the claimant. It does not have to name the company explicitly, but it must be understandable that the statement concerns the claimant.
- Publication: The statement must have been communicated to at least one person other than the claimant.
The threshold detailed in the Defamation Act 2013 for a claimant to proceed with a claim is that a company must have suffered serious harm. This is in reality a loss of revenue/customers caused by the false comments made.
It may be possible to argue that the comments are likely to have resulted in a downturn in business. By way of example, in the case of Summerfield Browne Ltd v James Waymouth [2021], a firm of solicitors sued the poster of a false review on Trust Pilot. The solicitor’s practice was able to show a reduction in the number of website enquiries after the comment was published and the judge accepted that that was likely to have been caused by the comments made. In that case, the judge awarded the claimant £25,000 in compensation and in doing so Master Cook stated:
“There is supportive evidence that the number of enquiries fell dramatically after the review was posted. Given the manner in which the claimant conducts its business I conclude that a substantial number of potential clients were put off.”
It is important to note that, whilst in theory, it is possible to argue that the Court should draw an inference as to serious harm being caused by the comments made, such a stance should only be adopted as a matter of last resort. By way of example of a claimant seeking to infer serious harm and the Court finding against him, see here.
Once the claimant company has established all of the points above, the burden of proof then shifts to the defendant to establish that one of the statutory defences applies. In this regard, defendants are able to argue, for example, that the comments made were substantially true, were honest opinion or were made on a matter of public interest.
For more information on how we may be able to assist you if you are struggling with potentially defamatory comments made by or about your company, please see here.
2. Malicious falsehood
Whilst defamation focuses on harm to reputation, malicious falsehood addresses false statements that do not necessarily harm reputation but can cause financial loss. A claim for malicious falsehood requires proof of:
- False statement: The statement must be untrue;
- Malice: The claimant must show that the defendant made the statement maliciously, meaning either knowing it was false or recklessly indifferent to its truth; or
- Special damage: The claimant must demonstrate specific financial loss directly resulting from the statement.
Malicious falsehood claims can be particularly useful when a statement is false and damaging but doesn’t meet the criteria for defamation. One factor that may favour a defamation claim over a malicious falsehood one however is that the burden of proof in respect of the claim rests entirely on the claimant.
3. Statutory protections
A little-used side effect of the UK GDPR is that the data protection legislation can be used to clean up damaging records or online entries relating to an individual. Whilst it is not an option directly open to companies to pursue, often comments are made about specific employees or the company’s directors/owners. Those individuals can invoke the data protection legislation with a view to having the record/online post rectified so that it is accurate. Clearly, the claimant in such a scenario will need to prove that the comment made is inaccurate to succeed.
One principal advantage to such an approach is that the limitation period in which a claimant can bring a claim under UK GDPR is much longer than in defamation/malicious falsehood.
5. Practical steps for protection
In addition to legal avenues, companies can take several practical steps to protect their reputation:
- Monitoring and response: Active monitoring of media and online platforms allows companies to quickly respond to and counteract false statements;
- Crisis management plan: Having a robust crisis management plan ensures a swift and coordinated response to reputational threats; and
- Public relations strategy: A strong PR strategy can help mitigate damage and restore public trust in the wake of false statements.
Where the above approaches do not succeed, it is essential to seek advice on how best to have harmful content removed as a matter of urgency, as the limitation period within which a claimant can pursue a defamation claim is only 1 year from the date of publication.
How can we help?
Kevin Modiri is a Partner in our expert Dispute Resolution team, specialising in civil disputes, insolvency, inheritance disputes, data breach claims and defamation claims.
If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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