I know you're not supposed to but c'mon..

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I've been taught not to care about other people's business, including what they think of you but when it comes to ruining your image to the public, hell, I'll do something about it. Just got home from a spanish class a friend was attending. We got in as guests since they're promoting their curriculum and it's benefits. My friend, who is attending the class, had two stubs and he gave it to me and another friend. The class was great. They really teach in-depth knowledge on how to use the spanish language and I've found that there are many words that Tagalog (Philippine language) had adapted from it. I didn't learn much, though, because I was chatting with another guest about something (..wanted to ask her bust size ). Then she eventually asked me who I'm with. I pointed to her my friend and she said something like "Oh, you're with him?" with a raised eyebrow and a suspicious face, and I said "Yeah, why? Do you know him?". Then she said "Yeah, but only by his name. Never actually talked to him about anything." I, then, said "You should try talking to him. He's a nice guy. But when his fangs come out you run straight to me." with a smirk but the joke didn't seem to take the suspiciousness away from her face. After a minute or two of silence I asked "I can't help but wonder about your previous reaction about my friend. Is there something I should know?" She resisted at first on telling it but with my nagging skills (not proud of them), I finally got her to talk. She said "Someone told me that he's a pedophyl that's why I stay away from him. I know he's your friend but I'd rather not get involve in anyway with those type of people." I was shocked upon hearing this. I told her "What? He's not a pedophyl! I've known him for years now and I'm so sure he isn't. Who told you that he was?" and she pointed to a group of guys up front and I noticed they were making jokes directed at my friend implicitly. I looked at my friend and he was just there looking at them. I excused myself from the girl and went back to where my friend was seated. I told him everything the girl told me and he was as shocked as I was. He said something like "I knew they were saying something about me, I just didn't get what it was." I told him we'll wait for those guys outside and do something about it. My friend, though, he is a righteous person (or he likes to believe that he is). He always did things the right way even though the others are stepping out of the line. He said "No, just let them be. Karma will catch up to them eventually." I told him if he's not gonna do anything about it then it's gonna keep going but he just shushed me everytime while facing the instructor. Do you really think karma works this way? I mean, I know you're not supposed to mind what others are thinking of you but when they start to spread stupid, outlandish things about you, aren't you supposed to do something about it? I know I did. What do you think? How would you have reacted if you were in the same situation my friend was?