Your mother was right, or at least partly right, you can’t catch a cold from going out without a coat in winter, but you can catch a lawsuit from violating her adage: “If you can’t say something nice don’t say anything at all.”
From time to time, unhappy customers, former employees or competitors may say, write or post unflattering things about your business. You may also, for whatever reason, find yourself commenting negatively, or inaccurately, about a competitor’s operations or products. All of these scenarios can lead to legal troubles, but for today, we focus on what you can say about a competitor without having to call us to see if you’re in trouble.
It is natural and often necessary to compare your business to your competitors. If a prospect hasn’t directly asked, “why should I buy from you,” then they are certainly thinking of that question and, even more certainly, expecting an answer to it. Even Marketing for Dummies will tell you that in answering that question, you must highlight all the benefits of your own services and products, and to do so in a way that sets you apart from the herd. In making this pitch, it is critical to keep in mind the often blurry line between a fair comparison and a libelous assertion that could bankrupt you—or at least give you a costly headache.
So, what can you say about a competitor without landing on a Zoom call with us? The answer is simple: opinion or truthful commentary is not defamation, but a false statement is. Of course, the real world is not this simple.
To help clarify the blurry line, we offer this illuminating demonstration of Chris Farley’s sales pitch in Tommy Boy that can pose a problem to your bottom line. Saying that your competitor’s product or service is inferior is an opinion—no problem with that. But if while making that comment you add statements that are not provable, you may have created a problem. In the above example, Tommy is on sound legal ground when he merely says that his brake pads are better than the other guy’s because that’s an opinion. Things get more complicated if Tommy says that his brake pads are better because they have an exemplary safety record, they are made with superior parts, or they undergo more rigorous testing. All of that is fine, and he is still safe from legal trouble – if all of that is true. Tommy is certainly allowed to tout how his company stands behind its product, but the line becomes more muddled if he suggests that his competitors have a history of not doing so, unless that statement is also true – and you can prove it. This is, of course, yet another classic “less is more” or at least “less is safer” scenario.
We have seen many instances where businesses, or their sales folks, cross the line from fair commentary and opinion into the land of unfair competition and defamation in their competitive (and mostly well-intentioned) pursuit of business. It is important to know where the guardrails are located as you develop marketing plans and instruct your employees in their pursuit of new customers and efforts to keep old ones. Libel and slander laws have unique rules concerning damages (including not having to prove any damages in some instances), making the price tag for an overly zealous attack on a competitor a costly experience.
As Ben Franklin said, and probably your mother too, “an ounce of prevention is worth a pound of cure.”
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For more information on the above issue or relating to any existing or potential business dispute, please contact:
David A Ward, Esq.
(973) 307-0800
