The definition of bait and switch

What is the bait and the switch?

Bait and switch is a morally questionable sales tactic that entices customers with specific claims about the quality or low prices of items that turn out to be unavailable in order to upselling on a similar and more expensive item. It is considered a form of retail fraud, although it takes place in other contexts. While many countries have laws prohibiting the use of bait and change tactics, not all occurrences constitute fraud.

Key points to remember

  • Bait and change occurs when a potential buyer is drawn to an advertised offer that looks attractive.
  • However, the advertised offer does not exist or is inferior in quality or specification, resulting in the buyer being offered an upsell.
  • The practice is considered unethical and, in many jurisdictions, is illegal.

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Understanding baits and switches

The “bait” in a bait and switch can be an advertised physical product or service that is particularly attractive in price or terms. It can also take the form of a tease interest rate, in the case of a mortgage, loan or investment product. Once a customer walks into the store or office to inquire about the advertised price or rate, the advertiser will attempt to sell the customer a more expensive product, which is the “switch”.

Bait and trade tactics, as a form of false advertising, can be the subject of legal action in many countries, including the United States, England and Canada. However, no matter how aggressive the advertiser is in their attempt to sell a more expensive product to a potential customer if they can sell the advertised teaser product, there is no course of action for the consumer.

In the United States, it is perfectly legal for a business to advertise a teaser item that is in stock in limited supply (a call product, for example) as long as they also advertise that a limited number is available and offer a rain check if the item sells.

Examples of baits and switches

Although relatively rare, the bait-and-swap tactic has gained notoriety in the mortgage market as a potentially unscrupulous marketing tactic intended to drive business. In a mortgage bait and swap, an agent or company will show extremely low results mortgage rates, knowing full well that the vast majority of candidates will not be able to benefit from these teaser rates. Once customers begin to walk into the office to inquire about the low rate, the agent will proceed to offer them the highest rates to which they are more likely to qualify, thereby earning a higher commission.

A similar strategy is seen in auto purchase finance, in which buyers are drawn to the possibility of a car loan with a rate as low as 0%. In reality, very few (if any) people will qualify for such a rate.

Bait and switch tactics are also common in other businesses.

  • In real estate, some unscrupulous brokers may advertise a large property at a price that is too good to be true to attract potential buyers. Once on board, the property in question is no longer available.
  • In restaurants and supermarkets, it has been found that about a third of the fish sold as one species (and priced that way) is another type of fish, less expensive.
  • Hotels offer low rates to attract guests who are then hit with hidden resort fees or other unexpected and little disclosed charges.
  • Headhunters can post attractive but bogus jobs for the purpose of collecting resumes.

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