Risk Insider: Kate Browne

The Cyber Smear: A Growing Global Issue

By: | April 2, 2018 • 2 min read

Kate Browne Esq., ARM is Underwriters Counsel at Swiss Re Corporate Solutions. She has spent her entire career in the insurance industry, and speaks and writes extensively on the impact on the legal implications of drones, autonomous vehicles, the internet of things, and other emerging risks. Kate can be reached at [email protected]

Corporations and businesses, both big and small, are used to criticism. In fact, a clay tablet displayed at the British Museum may be the world’s first consumer complaint. The tablet contains excerpts of a letter from an ancient Babylonian who received the wrong grade of copper in 1750 B.C. In the 21st century, unlike ancient Babylon, a competitor, disgruntled employee, or unhappy customer can quickly and easily cause widespread damage to a company’s reputation through tweets, blogs, online reviews, and social media.

There is a difference between legitimate criticism and defamation. While the precise law varies by jurisdiction, defamation is generally understood to be any false statement of fact that injures a person’s status, good name, or reputation in the community. Spoken defamatory statements are known as “slander”, and written ones are referred to as “libel.” Modern law generally disregards the distinction between the two, and simply refers to all defamatory statements as “defamation.”

The internet has opened an almost infinite array of places for defamatory speech to occur, leading to phenomena knows as “cyber smearing”. Cyber smearing is the anonymous posting of disparaging, or even defamatory, rumors and statements about a company, their executives or even stock via the Internet.

Companies cannot stop cyber smearing but they can prepare for the inevitable by having damage control mechanisms in place. Prevention and preparation are, without a doubt, the key to combating cyber smears.

Over the last few years lawyers around the world have filed lawsuits alleging cyber defamation and cyber smearing, several of which have resulted in sizable verdicts. On January 31, 2018, the Ontario Court of Appeals upheld a $700,000 award which included punitive damages in a dispute between former business partners. According to the Court, the defamatory activities, which consisted of anonymous emails and posts on internet bulletin boards, were “unrelenting, insidious and reprehensible” and stretched out over a “lengthy period” (Rutman v. Rabinowitz, 2018 ONCA 80).

In April 2016, a Nevada federal court judge upheld a $38 million jury verdict in favor of a Los Angeles real estate investor against a pair of former tenants and their company. The court said the award was supported by evidence and wasn’t excessive as the former tenants had created websites calling the real estate investor “the next [Bernie] Madoff.”

In 2012, a trial judge in Tarrant County, Texas reversed the jury’s award of $13.7 million to a lawyer and his wife who were falsely accused of sexual perversion, molestation and drug dealing in more than 25,000 online postings.

In 2006, a jury in Florida, awarded a woman $11.3 million for defamatory online postings.

Civil and criminal cyber defamation cases have been filed in dozens of countries including Ireland, England, India and Malaysia.

The Internet changed the world by giving us the ability to instantly share information and ideas with a worldwide audience. As the United States Supreme Court has observed, with the Internet “. . . any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox” (Reno v. A.C.L.U., 521 U.S. 844, 870, 1997). Companies cannot stop cyber smearing but they can prepare for the inevitable by having damage control mechanisms in place. Prevention and preparation are, without a doubt, the key to combating cyber smears.

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