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Bait And Switch

by | Nov 17, 2022 | Resources

Bait And Switch

Everything that you need to know about Bait and switch (code swapping)

Bait and switch are morally suspect sales technique that lures customers in with specific claims about the low prices or quality of items that turn out to be unavailable to upsell them on a similar, pricier good.

What Is Bait and Switch in Business?

A bait and switch is a fraud scheme, whereby a seller advertises an appealing but genuine offer to sell a product or service that the seller does not intend to sell. Instead, the seller offers a defective, sub-par, or unwanted alternative. It is often considered a form of retail sales fraud, though it takes place in some other contexts. While many nations have laws against using bait and switch tactics, not all occurrences constitute scams.

Bait and Switch Tactics

While mostly uncommon, the bait and switch tactic has gained popularity in the mortgage market as a potentially unscrupulous marketing technique meant to leverage the business. In a mortgage bait and switch, a company or agent will post exceedingly low mortgage rates, knowing well that the majority of applicants will be unable to qualify for these teaser rates. Once customers start to come to 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 technique is used in auto purchase financing, in which buyers are lured by the means of a car loan with a rate as low as 0%. In reality, less number of people will qualify for such a rate.

Other Endeavors of Bait and Switch

  • In real estate, some unethical brokers may advertise a great property at a good-to-be-true price to attract potential purchasers. Once they are on board, the property in the sale is no longer available.
  • Hotels offer low teaser rates to attract customers who are later hit with hidden resort fees or other unexpected, minimum disclosed fees.
  • Headhunters may post fake yet attractive jobs in an attempt to collect resumes.

Noticing and Avoiding Bait and Switch Scams

Bait and switch frauds can be difficult to notice at the prior stages, but there are some means to minimize becoming a victim. First, if something looks or sounds too 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 drastically minimum prices attached is probably misleading. If a seller comments that a product is out of stock or in limited supply, it can be another warning that you aren’t going to get what’s being offered. Confusing terms and conditions or fine print can also be a sign of trouble.
In general, if a seller is unwilling to disclose the information if you ask (e.g., specifications, to send more pictures of the product, details, etc.) it could be because they do not have that product with them. Thus, one way to avoid a bait and switch is to ask for more photographs and more information (if online). Also, be sure to get an offer of the deal in written form so that you can prove that you thought you were getting one thing and not the other. Always read the fine print and terms and conditions to see if anything strikes you as misleading.

How to Prove a Bait and Switch

Bait and switch scams are often considered to be a type of fraud, and therefore illegal. Bait and switch scams can fall under several violations, from false advertising to breach of contract. This act is also a violation of the Consumer Fraud and Deceptive Business Practices Act. However, sellers can also reduce their exposure to such accusations by putting a legal disclaimer on their marketing materials.
Proving a bait and switch case in court is not a cakewalk, and therefore it is often best to be vigilant as a consumer. For example, to prosecute a misleading and false advertising claim, five criteria must be met:

  • The plaintiff must show that the defendant made misleading or false statements about a product or service.
  •  The defendant engaged in actual deception or at least intended to deceive the majority of targeted customers.
  •  The deception itself is much substantial that it is highly likely will influence a consumer to purchase the service or product.
  • The advertised product or services being offered are items that are sold in interstate commerce.
  • A probability that the defendant’s conduct will highly likely result in harm to the plaintiff.

Penalty for Bait and Switch Advertising

The penalty will be based on the severity of the case and under which laws the case has been prosecuted. If it is a violation of misleading advertising, the bait and switcher may be fined up to $10,000 and/or up to one year behind the bars per offense, plus legal fees and damages.

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