What Is Bait and Switch?

Bait and switch is a morally suspect sales tactic that lures customers in with specific claims about the quality or low prices on items that turn out to be unavailable in order toupsell them on a similar, pricier item. It's present in various markets, such as retail, banking, real estate, and it can lead to consumer exploitation.

It is considered a form of retail sales fraud, though it takes place in other contexts. While many countries have laws against using bait and switch tactics, not all occurrences constitute fraud.

How Bait and Switch Schemes Operate

The "bait" in a bait and switch can be an advertised physical product or service that has a notably attractive price or terms. It can also take the form of ateaser interest rate, in the case of a mortgage, loan, or investment product. Once a customer comes 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 constitutes the "switch."

Bait-and-switch tactics, as a form of false advertising, may be subject to lawsuits in many countries, including the U.S., England, and Canada. If the advertised teaser product is available, even aggressive upselling doesn't give the consumer any legal recourse.

It is perfectly legal in the U.S. for a business to advertise a teaser item that is stocked in a limited amount (aloss leader, for example) as long as they also advertise that a limited number are available and offer arain check if the item sells out.

Common Bait and Switch Tactics in Various Industries

While relatively uncommon, the bait-and-switch tactic has gained notoriety in the mortgage market as a potentially unscrupulous marketing tactic meant to drive business. In a mortgage bait and switch, an agent or company will post exceedingly lowmortgage rates, knowing full well that the vast majority of applicants will be unable to qualify for these teaser rates. Once customers begin to come into the office to inquire about the low rate, the agent will proceed to offer them the higher rates they are more likely to qualify for, thus earning a greater commission.

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

Bait-and-switch-like tactics are common in other endeavors, as well.

• In real estate, some unscrupulous brokers may advertise a great property at a too-good-to-be-true price to attract potential buyers. Once they are on board, the property in question is no longer available.
• In a study by the Society for Conservation Biology, it has been found that about 40% of fish sold as one species (and priced that way) is another type of fish.
• Hotels offer low teaser rates to attract guests who are later hit with hidden resort fees or other unexpected, minimally disclosed fees.
• Headhunters might post attractive fake jobs to collect resumes.

Tips for Spotting and Avoiding Bait and Switch Scams

Bait and switch scams can be hard to spot, but there are ways to avoid falling victim. First, if something looks or sounds to good to be true it is a red flag. An image of a brand new car for sale or a luxury apartment for rent but with rock-bottom prices attached are probably misleading. If a seller comments that a product is in limited supply or out of stock, it can be another warning that you aren't going to get what's being offered. Confusing fine print or other terms and conditions can also be a sign of trouble.

In general, if a seller is reluctant or unwilling to disclose information if you ask (e.g., to send more pictures of the product, specifications, details, etc.) it could be because they do not actually have that product around. Thus, one way to avoid a bait and switch is to ask for more information and more photographs (if online). Also, be sure to get an offer of the deal in writing so that you can prove that you thought you were getting one thing and not the other. Always read the terms and fine print to catch misleading details.

Proving a Bait and Switch Case in Court

Bait and switch tactics are often considered to be a type of fraud, and therefore is illegal. Bait and switch scams can fall under a number of violations, from breach of contract to false advertising. A “bait and switch” is also a potential violation of the Consumer Fraud and Deceptive Business Practices Act or Section 5 of the FTC Act. Ultimately, the U.S.Federal Trade Commission (“FTC”) is responsible for monitoring and enforcing laws that protect consumers from false advertising and fraudulent acts like bait and switch tactics. However, sellers can also minimize their exposure to such accusations by putting a legal disclaimer on their marketing materials.

Proving a bait and switch case is tough; thus, consumers should stay vigilant. To succeed in a false advertising claim under the Lanham Act, five criteria must be met:

• The plaintiff must prove the defendant made false or misleading claims about a product or service.
• The defendant must have deceived or intended to deceive most of the targeted consumers.
• The deception itself is substantial enough that it is more than likely that it will influence a consumer to purchase the service or product.
• The advertised service or product being offered are items that are sold in interstate commerce.
• A probability that the defendant’s conduct will likely result in harm to the plaintiff.

The Bottom Line

The bait and switch tactic is unethical and it has potential legal implications as a form of fraud. It's used across various industries, from retail and mortgage markets to real estate and online job postings.

Consumers should remain vigilant against deals that appear too good to be true and look out for red flags such as limited availability or complex terms. Seek more information and insist on written confirmation of offers to protect yourself. It can be difficult to legally prove a bait and switch case.