“Bhikkhus, those bhikkhus who exclude the meaning and the Dhamma by means of badly acquired discourses whose phrasing is a semblance [of the correct phrasing] are acting for the harm of many people, for the unhappiness of many people, for the ruin, harm, and suffering of many people, of devas and human beings. These bhikkhus generate much demerit and cause the good Dhamma to disappear.
“Bhikkhus, those bhikkhus who conform to the meaning and the Dhamma with well-acquired discourses whose phrasing is not [mere] semblance are acting for the welfare of many people, for the happiness of many people, for the good, welfare, and happiness of many people, of devas and human beings. These bhikkhus generate much merit and sustain the good Dhamma.”
This can be found on page 160 of “The Numerical Discourses of the Buddha,” translated by Bhikkhu Bodhi.
So the message here is that when paraphrasing is bad enough to “exclude the meaning and the Dhamma [truth]” from the teachings, it does a grave disservice to spiritual seeker and causes the destruction of the Dharma/Dhamma. This makes sense. When people hear teachings purporting to be Buddhism which distort the message of the Buddha — when a “Fake Buddhism” appears — then the genuine teachings are compromised.
This doesn’t necessarily imply that paraphrasing in itself is bad. The statement is about paraphrases that distort and obscure the teachings. I call this category the “lost in mistranslation” kind of Fake Buddha Quote.
Many of the fake quotes on this site are of this nature.
Note the Buddha’s very strong language, with words like “ruin, harm, and suffering.” The claim many people make that the Buddha would be “too spiritual” to be concerned about being misquoted is fictional, if we assume that this sutta correctly represents what the Buddha taught. And really there’s no basis for assuming otherwise.