Should I defend myself against bad feedback?

You can prove your concern for and dedication to your clientele by showing that you actively engage with both positive and negative feedback. Don't take the criticism personally, and avoid defending the company or the issue. Instead, you should side with the customer and work immediately on making things right. Assure the client that their feedback has been received and that they will be assisted.

Is it ethical to pay people for the positive reviews they write?

There are many moral and legal issues with paying customers or third parties for positive reviews. To be safe, you should never pay for a review, even though some shady businesses use this practice.