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Bait-and-switch, also sometimes referred to as "The James Effect" (named after noted international man of mystery, James Bai), is a form of fraud used in retail sales but also employed in other contexts. First, customers are "baited" by merchants' advertising products or services at a low price, but when customers visit the store, they discover that the advertised goods are not available, or the customers are pressured by sales people to consider similar, but higher priced items ("switching").
The intention of the bait-and-switch is to encourage purchases of substituted goods, making consumers satisfied with the available stock offered, as an alternative to a disappointment or inconvenience of acquiring no goods (or bait) at all, and reckoning on a seemingly partial recovery of sunk costs expended trying 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.
In the United States, courts 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, bait and switch 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. In Canada, this tactic is illegal under the Competition Act.
In 2014, an Indiegogo campaign titled "The Body Dryer" employed this method of fraud, raising over $300,000 USD.
- 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.
- Home service companies such as in the carpet cleaning, air conditioning, and security system industries often use bait-and-switch.
- 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 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 expected negative community review.
- http://www.legislation.gov.uk/uksi/2008/1277/schedule/1/made paragraphs 5 and 6
- McArthur, Douglas (2008-04-30). "How does a $224 flight end up costing $826?". The Globe and Mail. Retrieved 17 September 2012.
- Hilton Settles Resort Fee Lawsuit 
- Braun, John (2013-10-01). "Carpet Cleaners Educate Consumers on Bait and Switch". Newswire. Retrieved 22 October 2013.
|Look up bait-and-switch in Wiktionary, the free dictionary.|
- Guides against "bait" advertising from the U.S. Federal Trade Commission.
- Google's bait and switch deception exposed at hearing, Forbes
- Competition Bureau Canada