In one of forums in www.Child.com there was a question:

'My 4-year-old is talking back and using bad words. Can I wash his mouth out with soap to teach him a lesson?'

Psychologist Gary D. McKay, Ph.D answers:

'While you might assume such punishment is appropriate, it actually reinforces your child's negative behavior. When kids do things like that and get a shocked or angry reaction from parents, they feel a sense of power. The more you respond, the more he'll act up.

What you can do: Calmly tell your child,

"I don't like that kind of language, and when you say those words, I won't pay attention to you."

Then expect his behavior to get worse; this is calls "the testing period." After a week or two, your child should give up using the rude words because he won't get anything out of it. Above all, you can help by setting a good example and speaking respectfully to others, including your child. '

Here is an excerpt from the book Parenting For Everyone (book2part1ch40), where Simon Soloveychik shows how a mother reacts to her daughter's unexpected rude word. 

'A healthy and robust three year old girl runs home and shouts to her mother, panting with excitement,

“You, you, you are a witch!”

She heard it on the playground.

How is one to answer this?  To beat her so that she wouldn’t dare to talk to her mother in such a way?  What would she grow up to be then if she at three years of age can say this to her mother –to her only mother!  What is with children now that they can say “witch” to a mother! But the mother replies,

“Wow, my darling,” and smiles, “Do you know who you are to me?  You are – my bunny!”

“And you, you are,” the girl is still indignant; “You are … a squirrel!”

That’s it.  Emotion disappears.  There is no tunnel.  There is no evil feeling.'  

The expert doesn't question if a child says the wrong word for the first time, maybe. The child may have no understanding of it. The assumption is that the child is guilty. So, the role of a parent is to teach him/her a lesson, even if it is not as physically rude as washing the mouth with soap.

The expert suggests to slightly threaten a child by not paying attention to a child. To the child it means a threat of love denial. The expert warns that the behavior will get worse for couple of weeks. Of course the child will be angry at mom for deprivation of love! But need for love is so essential that the child will have to accept that he/she is loved only with the condition of not saying those "special" words.

So the child learns three lessons: one, mom doesn't have faith in him/her; two, he or she is not loved unconditionally; three, those words are powerful. 

According to Simon Soloveychik "we ourselves sow the seeds of evil, nobody else." "The smallest grains of evil – are our rude, careless touches on the sensitive, subtly organized soul of a child, who, we think, doesn’t understand anything and, therefore, will tolerate everything."

Here is a simple strategy of upbringing – not to counter childish vicious feelings with a vicious feeling of adults, not to create tunnels of evil, and in no way to encroach upon a child.  Then those small vicious emotions, caused by grains of evil, which go toward us, will disappear and dissolve.  But good emotions will find roots; they will turn to virtues, to the quality of character, which themselves will beat possible faults.'  

What lessons does this child learn? He or she is loved because mom still plays with him/her. Mom has faith in him/her. He doesn't even remember what words he/she was saying few minites ago.