hook_entity_update cancel When updating an entity I want to validate that the fields I am updating are correct. As this may be coming from VBO or a Drupal form I thought I could do it in hook_entity_update.

In hook_entity_update() is there a way to not update the entity and return/display a message.

Maybe I am coming from the wrong angle.
The right hook for this job is hook_field_attach_validate().

(As implemented by the Field Validation module, which may also do what you want.) 

hook_entity_update() actually fires after the entity and all fields have already been saved (in the case of nodes, at least).