Definitely if they start trying to haggle, or pressure you into something, that's a hard pass, I'll say whatever bullshit it takes to get them out the door. I'm happy to help out the former at the expense of fielding the latter, though I can understand why not everyone is!
The sueing angle kicks in when you do stuff like give feedback for folks who you think will take it well Vs keep it away from folks who give you a bad feeling or whatever. It is all exposure.
Almost in all the companies I have been at, there has been a big push to keep the interview experience uniform for all candidates. So you can't have hugely different loops setup for the same level for different candidates for example.
Fun fact: This is a main reason why as a company grows, you aren't able to get in with a wink and a nod anymore, even if you know 100% of the folks already there.
The impact would have to be astronomical. It's not.
> bad mouthed in social media
Which could happen anyway. And feedback might actually reduce the chances.
And there is plenty in it for them, as the candidate may want to apply a second time at a later point, having been made aware of and improved on the areas that were identified as needing improvement. They'll be more likely to re-apply to a company that gave the feedback than to a company that didn't.
There's also plenty of reasons a candidate didn't get hired that not really immediately correctable or not even their fault. For the latter, we do provide feedback/explanations and try to keep in touch in hopes they apply again in a couple of years. But 80% of the time we really just don't want to see the candidate again. I'd say 10% of the time, we see the candidate again, but so far, even on reappearance years later, they get the same feedback from completely different interviewing committees.
For what it's worth, as an interviewer I'm happy to give feedback in person, at the end of the interview, if the candidate asks for it. It's much easier to do when you're both in the same room, and asking e.g. "is there anything you think I could improve on?" makes a positive impression either way.