Bait-and-switch

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.

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 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 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 sockpuppet 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

• AIDA
• Choice architecture
• Contract of sale
• Cross-selling
• Door-in-the-face technique
• Foot-in-the-door technique
• List of marketing topics
• Low-ball
• Marketing
• Permission marketing
• Promotion
• Sales
• Selling technique
• Rickrolling
• Teaser rate
• Trojan horse (business)
• Up-selling
• Value added selling

External links

• Guides against "bait" advertising from the U.S. Federal Trade Commission.
• Google's bait and switch deception exposed at hearing, Forbes