Derrick (JAMES MARSDEN), Jones (LENA HEADEY) and Travis (NORMAN REEDUS) are three close friends and college roommates. Living off Derrick's family wealth, the trio get along splendidly, partying all night and attending one class in particular during the day, a journalism course taught by Professor Goodwin (ERIC BOGOSIAN) that gets them thinking about how news and gossip are intertwined.
At a party one night, they spot Naomi Preston (KATE HUDSON), a spoiled rich girl, and her boyfriend, Beau Edson (JOSHUA JACKSON). While assisting a drunk and nearly sick girl, Derrick happens to spy upon Naomi and Beau fooling around, although nothing apparently happens between them since Naomi passes out.
All of which gives Derrick and his roommates an idea. Since none of them particularly likes Naomi and she has a reputation for abstaining from sex, they decide to plant a little playful gossip that she and Beau actually had sex, and then see how their malicious rumor spreads around the campus.
Of course, the story travels like wildfire, and once Naomi's friend Sheila (MARISA COUGHLAN) informs her of what she's heard, Naomi begins to think that perhaps Beau raped her while she was passed out. While Jones begins to get a little antsy with this twist in the story, Derrick and Travis want to see how it continually develops.
Eventually, Naomi believes she was raped and detectives Kelly (SHARON LAWRENCE) and Curtis (EWARD JAMES OLMOS) arrive on the scene, investigating Beau and interviewing anyone who might know what really happened. Realizing the mess they've created, the three friends try to set matters straight, but in doing so unleash previously hidden secrets that soon threaten their friendship and perhaps even their lives.