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Trade References and Defamation: Libel and Slander
When responding to requests for credit information about a customer or when exchanging information about customers, you must also be careful to avoid defamation. Defamation is a false statement that damages or injures the name or reputation of a third party. The person or company defamed can sue for damages. The two types of defamation are libel and slander. Libel is defamation in some permanent form, typically defamation in writing. Slander is defamation in the form of speech.
In the United States, laws protect the reputation of businesses and businesspeople. Courts have recognized that a person or business firm may suffer real financial damage by being lowered in the esteem of customers, suppliers or other groups as a result of defamation, and may award financial damages to individuals or organizations defamed by a creditor. For this reason, credit professionals should remember to provide facts and not opinions and specifically factual and historical information. For example, it would be a fact if a creditor shared with others this information: A particular customer paying COD has bounced three checks and has not made any of them good. However, it could be defamation for the creditor to describe that customer as inreliable, or a liar, or a thief, or untrustworthy.
Edited by Michael C. Dennis. Mr. Dennis is a consultant, and can be reached by email at mcdennis13@yahoo.com. Please visit Michael's website at www.coveringcredit.com