Many have the tendency to accept the truth of gossip when it is well-known amongst a group of people. The Chofetz Chaim writes that this was a common mistake in his days, and by listing the details he hoped to prevent people from stumbling. (See Chofetz Chaim chapter 7)
One may not accept information as true gossip:
1) Even if it is said in front of many people.
2) Even if the person about whom the gossip is said is present and does not deny its truth.
3) Even if several people repeat the same gossip.
After all, the person spoken about did not admit to the truth of what was said about him. There are several possible explanations for his silence: perhaps he wanted to avoid getting into an argument, or perhaps he just assumed that everyone would automatically believe the gossip regardless of his objections. There would be a mitzvah for those listening to judge the subject of the gossip favorably: “Betzedek tishpot et amitecha.”
The Chofetz Chaim writes that the speaker is in fact guilty, while the person spoken about has a chezkat kashrut (he is presumed to be a good Jew). Furthermore, the speaker will very often exaggerate or add untruths. Ultimately, there is no such thing as valid testimony unless it is given in Bet Din, so how can anyone believe the words of this speaker?!
Even if one may not accept the gossip as true, it is correct to be wary and take precautions lest the words of the speaker are true. This principle is learnt from the story of Gedaliah ben Achikam, who did not take seriously the warnings that Yishmael planned to kill him, since he did not want to accept gossip. Chazal say he should have taken steps to protect himself from Yishmael, on the basis of the “gossip” spoken about Yishmael.