Unfortunately, it does. My aunt-in-law told me a story how her cousin thought she betrayed her over something and spread rumors and lies about my aunt. Even my aunt's friends believed those lies and wouldn't talk to her for weeks. When my aunt found out who it was that was spreading the lies and even confronted her cousin, her cousin was just 'Oh I thought you betrayed me first. Sorry' or along those line. My aunt had to go around school, clearing it up with her friends. It was after this that my aunt learned who her real friends are.
Then there was my history teacher back in high school that got arrested because his cheating wife planted drugs in his car and called the police that he was selling drugs to students. The whole school was buzzing with "Mr. [my history teacher] was caught with drugs in his car" for a few days until the investigation came out and told us it was the wife that planted the drugs because she was cheating on him with a coach in this very same school. The evidence was the text messages she was sending to the coach and there were no finger prints of my teacher, but the coach's and the wife's. So yeah, almost the whole school believed my teacher was a drug dealer until evidence came out to tell us otherwise. But the stupidest thing I heard years later was that my teacher got back with his cheating wife again.

And this is why I never believe rumors or 'he said she said' BS. The person who spreads it could have malicious intent. I've heard and seen too many of them back in school and on the internet that I became to be "Proof or it didn't happen" kind of person.