What to do when someone bad-mouths your business?

The world is full of haters. Whether it is a personal attack or simply a competitor trying to snatch away your business, it is likely that at some point, someone has bad-mouthed your business or expertise in one way or another. The question is, what can you do?

I can sue them for “defamation” right?

Most people would be familiar with the term “defamation”. However, something you should know is that a company that operates for a profit and which has more than 10 employees cannot bring a defamation claim.[1]

If you are not running your business through a company (for example, you are a sole trader or a partner in a partnership), or your company is either a not-for-profit or employs less than 10 people, then you can bring a claim in defamation. Defamation is also great in personal context – that is, if someone is making statements about you personally (which could apply to professionals such as real estate agents, brokers, accountants and so on).

Please note a claim in defamation must be brought within 1 year since the allegedly defamatory conduct was made.

Australian Consumer Law

Another avenue open to you is to bring a claim under the Australian Consumer Law (“ACL”).[2] The ACL offers a wide range of protections to consumers, including protections against someone saying false or misleading things about your business.

Section 18 provides a general protection that a person must not engage in conduct that is likely to mislead or deceive.

Section 29 states that a person must not make false or misleading representations about goods or services, for example:

• that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;
• that services are of a particular standard, quality, value or grade;
• a statement that purports to be a testimonial by any person relating to goods or services; or
• a statement concerning the place of origin of goods.

Of course, to succeed in a claim under the ACL, you must be able to show that the statement made by the other person was indeed false or misleading.

The benefits of bringing a claim under the ACL is that there are a wide range of remedies available to a claimant – for example, a monetary penalty or an injunction restraining further conduct. In addition, a person who makes false or misleading representations about goods or services may also be guilty of an offence under the ACL.

Injurious falsehood

You can also bring a claim through the tort of injurious falsehood. In very broad term, it is similar to the tort of defamation but it is intended to be used in business contexts.

Under the tort of injurious falsehood, a party who makes a false statement concerning a second party’s goods or business to a third party may be liable for any damage caused to the second party.

The main issue with injurious falsehood is that you can only recover damages if you can prove you have suffered loss (which usually involves calculating and ascertaining the loss). This is often difficult in these instances because bad-mouthing results in things like loss of reputation and loss of future business, which is difficult to quantify and prove.

Contact us and disclaimer

Please remember this blog post is merely a general summary of law and should not be relied upon as legal advice. If you need further advice on this issue, please contact me.

[1] Defamation Act 2005 (NSW), section 9.

[2] Competition and Consumer Act 2010 (Cth), Schedule 2.