Ya - that sucks that people feel the need to do such things to one another ... I agree with Momof4 as hard as it might be take the high road and ignore the rumors unless you have something concrete where she has WRITTEN something that is a defamation to your business either online or in an email which you could use as proof to send a 'cease and desist or I will be forced to sue' letter for best to try to take the point of view that perhaps the ex-client 'misheard' or it was not you they were talking about - specially since other providers in your area have not heard anything.

Take comfort in the reality is that when one provider takes to 'bashing' another providers business instead of focusing on their own business and why it is the place to be it only makes THEM look bad in the long run - as a client are you going to trust someone whose business practice is to talk smack about another business or when they do that are you going to look at them and question if having a relationship with them is wise cause they might also talk smack about you behind your back - so karma will play out in the end that her negative energy and focus will come back to bite her in the ass!

Concentrate on your own business and showing anyone who comes through your door all the positive things about your program - and they will quickly see that anything they might of heard 'negative' was likely the result of some petty jealous person who has no self confidence in their own program so instead opts for the negative smear campaign of others!