Point taken, but with the given numbers it wouldn't actually be that bad. If you interview thousands of candidates, then paying an amortized $100 per candidate is not too much. If that is what it costs to give people a good impression of your company, it might well be worth it.
Oh god, that's the worst deal of all time. A hundred bucks for the possibility that a rejected job candidate will say something nice about the rejection process? Put that hundred bucks into making your product better so people will talk about that, or improving working conditions for your existing staff so they'll talk about that, or hiring a PR company, or any of a million things before a lawsuit.
That's reasonably targeted advertising though. If you're hiring a C developer in SF -- there's a good chance that the person you reject has a whole bunch of friends/colleagues/acquantences that are C Devs in SF.
And if you've got 1000 ex-applicants telling their colleagues - "don't interview with them" you're shooting yourself in the foot.
