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What is commercial disparagement?

On Behalf of | Dec 15, 2022 | Business Litigation |

The tort of commercial disparagement occurs when someone makes derogatory statements about a competitor or another business with the intent of dissuading others from dealing with the disparaged company. The accusation may come from a disgruntled customer or another business’s attempt to prevent fair competition. While similar to defamation, commercial disparagement involves untrue statements about a company instead of an individual.

Common examples

Common examples often include accusing the business of being unethical, dishonest, or incompetent. Some common situations involving commercial disparagement include:

  • False complaints or reports on a website featuring complaints or reviews
  • Fake reviews or commentaries on networking or professional sites
  • Fake reviews on consumer review sites

Four elements of commercial disparagement

The plaintiff can prevail if the statement is false and they prove it using these four elements:

  1. The false statement was published in writing or orally to a third party.
  2. The false statement was made with the intent of causing financial loss to the business.
  3. The false information caused financial loss.
  4. The defendant knowingly made false statements with disregard for the facts.

Proving damages

Proving that the defamatory statement caused economic loss can be difficult. While the defendant’s comments may have led to a drop in sales, the plaintiff must provide a thorough analysis and documentation of lost profits. This can involve bringing in economists, accountants, statisticians, and data analysts who can act as expert witnesses.

What can you do if your business has been disparaged?

The marketplace can be a cutthroat arena where competitors say or do things they should not. Fortunately, businesses harmed by false statements can fight back by taking the competitor to court. In situations like this, having an experienced litigator handle the case can be a real asset in working toward a successful outcome.