First a few techincal points:
The term "lashon hara", although often used by people in the sense that
Karen used it, is actually defined by halacha with a slightly different
meaning. Technically, lashon hara refers specifically to communicating a
true story which portrays someone in a bad light (i.e. - he or she did this
or that). The term lashon hara does not apply when making fun of someone
for something that they did not do. The term lashon hara will apply to
jokes which make fun of something that someone actually did do, if the end
result will be to lower the status of the person in the view of the listener.
There are a number of terms which could be used to describe what Karen is
referring to. Two examples are:
Onat Devarim (roughly translated as "verbal harrassment")- if the joke will
make the "victim" feel bad
A trangression of "Love your neighbor as yourself"
Technicalities aside and to return to Karen's point, I think that there is
really no shortage of funny stories and jokes available which do not come
with the "price tag" of sacrificing someone else's dignity.
Uri Portal