I stop them and let them know that I know that person and that this allegations are false, and that they need to stop and wonder why those people said those things about that person.
It happened to me and I let the lady know that this was my childhood friend and that she couldn't criticize me in my presence, same thing with a co worker.
I am a trustworthy friend...and have been hurt and almost destroyed by lies and gossips of jealous and ignorant people. I neither participate to it nor participate to that. That is a serious matter, those words can hurt and destroy, let's stop the evil circle.
It it the trap of those people who go around destroying other people's character because they have personal issues. We need not feed them or support their effort. Imagine you are the person talked about and react the right way.
Love and peace upon all