Bait and switch
Encyclopedia
Bait-and-switch is a form of fraud
, most commonly used in retail sales but also applicable to other contexts. First, customers are "baited" by advertising
for a product or service at a low price; second, the customers discover that the advertised good is not available and are "switched" to a costlier product.
, court
s have held that the purveyor using a bait-and-switch operation may be subject to a lawsuit
by customers for false advertising
, and can be sued for trademark infringement
by competing manufacturers, retailers, and others who profit from the sale of the product used as bait. However, no cause of action
will exist if the purveyor is capable of actually selling the goods advertised, but aggressively pushes a competing product.
Likewise, advertising a sale while intending to stock a limited amount of, and thereby sell out, a loss-leading
item advertised is legal in the United States. The purveyor can escape liability if they make clear in their advertisements that quantities of items for which a sale is offered are limited, or by offering a rain check on sold-out items.
In England and Wales it is banned under the Consumer Protection from Unfair Trading Regulations 2008. Breaking this law can result in a criminal prosecution, an unlimited fine and two years in jail.
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, most commonly used in retail sales but also applicable to other contexts. First, customers are "baited" by advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
for a product or service at a low price; second, the customers discover that the advertised good is not available and are "switched" to a costlier product.
Function
The goal of the bait-and-switch is to persuade buyers to purchase the substitute goods as a means of avoiding disappointment over not getting the bait, or as a way to recover sunk costs expended to try to obtain the bait. It suggests that the seller will not show the original product or service advertised but instead will demonstrate a more expensive product or a similar product with a higher margin.Legality
In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, court
Court
A court is a form of tribunal, often a governmental institution, with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters in accordance with the rule of law...
s have held that the purveyor using a bait-and-switch operation may be subject to a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
by customers for false advertising
False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
, and can be sued for trademark infringement
Trademark infringement
Trademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees...
by competing manufacturers, retailers, and others who profit from the sale of the product used as bait. However, no cause of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
will exist if the purveyor is capable of actually selling the goods advertised, but aggressively pushes a competing product.
Likewise, advertising a sale while intending to stock a limited amount of, and thereby sell out, a loss-leading
Loss leader
A loss leader or leader is a product sold at a low price to stimulate other profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. A loss leader is often a popular article...
item advertised is legal in the United States. The purveyor can escape liability if they make clear in their advertisements that quantities of items for which a sale is offered are limited, or by offering a rain check on sold-out items.
In England and Wales it is banned under the Consumer Protection from Unfair Trading Regulations 2008. Breaking this law can result in a criminal prosecution, an unlimited fine and two years in jail.
Non-retail use
- Employers are known to use bait-and-switch tactics by advertising a job opening in a way that gives a misleading impression of likely working conditions or compensation packages.
- Bait-and-switch tactics are frequently used in airline and air travel advertising.
- Hotels widely use the form of bait-and-switch tactics known as 'resort fees'. They first attract customers by advertising the lower price (which appears on all promotional materials and rate comparison engines), and charge customers the mandatory "resort fee" when they arrive for check-in.
- Software companies that initially offer software products or services for free (often under a "Beta" moniker) and at a later point make parts or all of the functionality available only in a paid product without communicating that intention from the start are said to employ bait-and-switch tactics.
- Online dating sites have been known to post fake profiles as a way of enticing people to join; in some cases, employees of the site's parent company send messages via a sockpuppetSockpuppet (Internet)A sockpuppet is an online identity used for purposes of deception. The term—a reference to the manipulation of a simple hand puppet made from a sock—originally referred to a false identity assumed by a member of an internet community who spoke to, or about himself while pretending to be another...
in order to encourage non-paying users to upgrade so they can message back. - Telecommunications companies often offer services at an introductory price that consumers may find reasonable, then after the introductory period escalate the price as much as 100% depending on the service. Some telecommunication companies also include a contract period in which the consumer is forced to pay the escalated price.
- Colleges and Universities often use front-loading of grants to reduce the out-of-pocket cost during the first year, replacing grants with loans in subsequent years.
- Real Estate Brokers and Agents often advertise themselves as buyer agents without disclosing that they may not be able to provide that service if they work for a brokerage that lists homes and represents home sellers.
In politics
In lawmaking, "caption bills" that propose minor changes in law with simplistic titles (the bait) are introduced to the legislature with the ultimate objective of substantially changing the wording (the switch) at a later date in order to try to smooth the passage of a controversial or major amendment. Rule changes are also proposed (the bait) to meet legal requirements for public notice and mandated public hearings, then different rules are proposed at a final meeting (the switch), thus bypassing the objective of public notice and public discussion on the actual rules voted upon. While legal, the political objective is to get legislation or rules passed without anticipated negative community review.See also
- AIDAAIDA (marketing)AIDA is an acronym used in marketing that describes a common list of events that may be undergone when a person is selling a product or service. The term and approach are attributed to American advertising and sales pioneer, E. St. Elmo Lewis. In 1898 Lewis created his AIDA funnel model on...
- Choice architectureChoice architectureChoice architecture describes the way in which decisions are influenced by how the choices are presented , and is a term used by Cass Sunstein and economist Richard Thaler in the 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness...
- Contract of saleContract of saleA contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller to buyer for an agreed upon value in money paid or the promise to pay same...
- Cross-sellingCross-sellingCross-selling is the action or practice of selling among or between established clients, markets, traders, etc. or the action or practice of selling an additional product or service to an existing customer. This article deals exclusively with the latter meaning. In practice, businesses define...
- Door-in-the-face techniqueDoor-in-the-face techniqueThe door-in-the-face technique is a persuasion method. The persuader attempts to convince someone to comply with a request by first making an extremely large request that the respondent will obviously turn down, with a metaphorical slamming of a door in the persuader's face...
- Foot-in-the-door techniqueFoot-in-the-door techniqueFoot-in-the-door technique is a compliance tactic that involves getting a person to agree to a large request by first setting them up by having that person agree to a modest request. The foot-in-the-door technique succeeds due to a basic human reality that social scientists call “successive...
- List of marketing topics
- Low-ballLow-BallThe low-ball is a persuasion and selling technique in which an item or service is offered at a lower price than is actually intended to be charged, after which the price is raised to increase profits....
- MarketingMarketingMarketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
- Permission marketingPermission marketingPermission marketing is a term popularized by Seth Godin used in marketing in general and e-marketing specifically. The undesirable opposite of permission marketing is interruption marketing. Marketers obtain permission before advancing to the next step in the purchasing process. For example, they...
- PromotionPromotion (marketing)Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....
- SalesSalesA sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
- Selling techniqueSelling techniqueSelling technique is the body of methods used in the profession of sales, also often called personal selling.Techniques in use in selling interviews vary from the highly customer centric consultative selling to the heavily pressured "hard close"....
- RickrollingRickrollingRickrolling is an Internet meme involving the music video for the 1987 Rick Astley song "Never Gonna Give You Up". The meme is a bait and switch; a person provides a hyperlink seemingly relevant to the topic at hand, but actually leads to Astley's video...
- Teaser rateTeaser rateA teaser rate is a low, adjustable introductory interest rate advertised for a loan, credit card, or deposit account in order to attract potential customers to obtain the service. The teaser rates are normally too good to be true for the long term, and are far below the common realistic rate for...
- Trojan horse (business)Trojan horse (business)In business, a trojan horse is an advertising offer made by a company that is designed to draw potential customers by offering them cash or something of value for acceptance, but following acceptance, the buyer is forced to spend a much larger amount of money, either by being signed into a lengthy...
- Up-sellingUp-sellingUpselling is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Upselling usually involves marketing more profitable services or products but can also be simply exposing the customer to...
- Value added sellingValue added sellingValue added selling is one of several sales techniques that relies on building on the inherent value of a product or service. By its nature the value add technique is a more flexible and customized selling approach that requires input from a defined range of average customers...
External links
- Guides against "bait" advertising from the U.S. Federal Trade CommissionFederal Trade CommissionThe Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
. - Google's bait and switch deception exposed at hearing, ForbesForbesForbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...