MIL does this all the time. Most recently said to dh that his brother said that we didn't deserve a visit from her(we're taking a stand against her at the moment), he was on her own with her. When fil said that his other son didn't say that she quickly denied saying it saying he had misunderstood her. She has done this to me a lot and is now doing it to him. What can you say when someone constantly says that you have misheard, misunderstood or have made it up yourself? I know it's a power thing for her because it makes the other person feel small but what would be the best retort?