Ever hear someone say something so juicy you decide to tell other people about it, even if you don't know if it's true or not? Admit it. That hearsay, or gossip, is precisely how rumors get started.
Hearsay is one of those awesome words that tell us its definition right up front. You don't have to figure it out by hearsay, or word of mouth, the definition is right there — when you hear someone say a rumor, that's hearsay.