if someone insinuates something false about you how should you react

Depends on the circumstance. If its a joke, deflect with an exagerated and baseless insinuation back. If its serious, you can be upset if you had respect for them. If you don't respect them, than sum up their obsession to smear and take the high road.
I personally feel special when my name becomes the bane that the meak traverse for purpose with their time. Moreso when its fluff and chaos with no merit.