What You Need to Know About Trade Libel

In today’s increasingly digital world, businesses promote their goods and services via a variety of advertising and marketing channels, including social media, websites, blogs, and more. While these channels may provide a quick and easy way to widen your customer base, they are difficult to control and can increase your risk of being accused of trade libel. Trade libel is defined as oral or written publication, in any manner, that slanders, libels, or disparages another company’s goods, products, or services. Examples of trade libel offenses include:

  • An advertisement, in print or online, that states without solid evidence that a competitor’s service is of lesser quality than the company making the claim
  • A sales presentation given by an overzealous rep who makes untrue remarks about a competitor’s product in an effort to sell his or her own
  • A social media post that calls attention to the supposed flaws in a competitor’s product without a proven basis for the comparison

The Increased Exposures

The increased risk stems not only from what is written in social media posts, online reviews, and websites, but also from what is spoken in digital and TV advertisements, presentations, conferences/public speaking, and broadcast interviews. Liberty Mutual Insurance’s Eric Hillner, underwriting strategy manager of general liability says, “There are so many ways to reach the public, and it is not just printed words that could get a business in trouble.”

Hillner also stresses the impact a trade libel case can have on a company. “Litigation arising from use of the Internet is becoming more frequent. Such cases can be quite expensive to defend. Additionally, even if the claim is ultimately dropped for lack of proof, just being accused can seriously tarnish a company’s reputation.”

How to Stay Protected

Education is critical to reducing exposure. “The first step to lessen your trade libel risk is creating awareness of the small exposures that are commonly overlooked but that can potentially lead to huge lawsuits.” Hillner adds, “Whether your company is working with an employee, an intern, or even a consultant, everyone tied to an organization should know the basics of trade libel.” Companies can take the following measures to help educate employees and minimize their risk.

Develop a policy: Your policy should clearly state that your organization does not authorize or endorse the release of disparaging information about competitors in any form (written, verbal, image, or video) and via any channel. Anyone violating this policy, including full- or part-time employees, interns, or contractors, is subject to disciplinary action.

Designate a company spokesperson: This person should be experienced in trade libel issues and receive frequent coaching by legal counsel on trade libel concerns. He or she should be the only person authorized to speak to the press.

Define a review process: A clear review process will ensure that all external communications are evaluated for trade libel vulnerabilities by legal counsel.

Analyze communications: Review ways in which your company communicates with the public, customers, and competitors. Search the Internet for official and unofficial channels of communication.

Have clear rules on company websites or blogs: With help from legal counsel, write terms and conditions of use that require you to approve any public statement. Have a gatekeeper who is responsible for reviewing posts and preventing those that belittle competitors.

Conduct training: Train all employees, contractors, and vendors in trade libel. For those who have external communication responsibilities, consider using refresher courses and/or tests to ensure that the policy is understood.

Trade libel cases are a serious threat to companies of all sizes for both financial and reputational reasons. Therefore, think twice before referencing any competitor information, and work closely with your marketing and legal departments to help minimize your risk.

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The illustrations, instructions, and principles in this material are general in scope and, to the best of our knowledge, current at the time of publication. No attempt has been made to interpret any referenced codes, standards, or regulations nor to identify all potential risks or requirements.