American Wood Fibers Inc. in Columbia lost sales after Internet chatter claimed that the company's cedar shavings sold in pet stores gave off fumes harmful to small animals
Reports on the Internet go beyond attacks on a company and its products. Sometimes they get personal, such as the false allegation that a company's CEO was a pedophile, another that one had been arrested and another claiming that a company president was having an affair.
Increasingly, companies large and small are discovering that the Internet is a two-edge sword.
On one hand, it offers another way to sell products and reach new customers. On the other hand, it permits the instantaneous dissemination of rumors and lies that can tarnish reputations and send sales and stock prices plummeting.
In a world where cyberspace rumors run rampant, there is a growing realization that businesses must fight back, and some have even hired firms to do nothing more than monitor the Net's tangle of chat rooms and discussion forums.
"You can circulate rumors that can bring a company to its knees," said James B. Astrachan, a Baltimore intellectual property attorney. "Anybody with the ability to make a Web site and send e-mail can be very dangerous if they are organized."
In recent years, H. J. Heinz Co. has battled a myth that surfaces with remarkable frequency on vegetarian Web sites -- that its ketchup is made from cow's blood.
"It's not true," complains Debora Foster, a spokeswoman for Heinz. "It's made from tomatoes."
But her protests don't stop some people from believing it -- or the rumor from resurfacing.
The guarantees of free speech put corporations in a vulnerable position, Astrachan said.
"The individual speaker has absolute First Amendment rights," he said. "The remedy the company has is if they can find out who's doing it and show it's untrue, they can sue for defamation or trade disparagement, and maybe they can go after punitive damages."
The courts have ruled that Internet servers or facilitators have no liability, Astrachan said. "The Internet has been given equal status to newspapers and other media in terms of First Amendment analysis."
Nonetheless, companies more and more refuse to accept the attacks on them and their products casually.
Procter & Gamble Co., for instance, has filed 15 lawsuits in its effort to stop claims that the company's moon and star logo is evidence of ties to satanism. Although those rumors have been around for several years, they reached a broader audience with the Internet. Except for one suit still in litigation, all the lawsuits were concluded in the company's favor, though that hasn't brought a halt to the rumors.
"All you can look at are the number of people who call to ask about the rumor," said Linda Ulrey, a company spokeswoman. "We don't know how many people haven't bothered to ask, yet their purchasing decisions were impacted." Procter & Gamble has been forced to do more than file lawsuits: Its Web site includes a letter from the president denouncing the rumor, letters of support from clergy, an explanation of the company's charitable donations and even a timeline on the origin of the logo. The company also has sent mass mailings to church groups.
"We've tried just about every communication vehicle to get the word out that this is just a ridiculous rumor," Ulrey said.
American Wood Fibers had to threaten litigation before the false claims about its cedar shavings were removed from a Web site. Executives of the company suspected that a friend of a competitor had planted the rumor.
But the problem didn't end there.
"It's like a chain letter," said John W. Casner, vice president of sales and marketing. "It's never-ending. We still get questioned from time to time."
Part of the frustration is that the company's accusers are, in most cases, anonymous.
"It's created a lie in the marketplace that I don't think will ever go away," Casner said. "It has a life of its own. It's forever on a Web site."
Traditionally, people have turned to public relations firms to keep track of such information and to give it the best possible spin.
"PR has traded for a long time on controlling who's sending the message, and so in that way you had a little control over how people would react to the messenger," said Steve Jones, professor and head of communications at the University of Illinois at Chicago. "Now you have no idea what's being said about your client or a product."
But the Internet and cable channels have created 24-hour-a-day news cycles and the need for monitoring goes go far beyond watching the mainstream media.
"The way the Internet and e-mail and all electronic communication works, wrong information can spread like wildfire," said Brian J. Lewbart, vice president of marketing communications for Richardson, Myers & Donofrio Inc. "The resulting damage to an organization can be huge. While it's becoming more of a challenge, it's becoming more important than ever to monitor what's being said and by whom."