What is a Bait and Switch?

The bait and switch system, which in some constitutions is considered a form of retail fraud, is a situation where a firm sells a product or item on juicy low prices only to up-sell the consumer on a pricier item which is similar to the former. Some legislations have rules against the bait and switch system, but due to its different uses, it is hard to know what and what constitutes fraud.

How Does a Bait and Switch Work?

Bait in bait and switch refers to a product which is engaging and has an appealingly low price or term. Baits can come in the form of juicy interest rates for loans and mortgages or other investment products or can come in the form of products which should normally command a high price. The switch, in this case, happens mostly when the customer has put both feet past the door. This way, the advertiser is in total control and would want to sell the customer a more expensive similar product. Also termed as false advertising, countries such as the United States, Canada, and England allows individuals to file a lawsuit against agencies using these tactics. However, it should be noted that once the advertiser is able to sell the teaser product, then the consumer would lose his or her rights to a lawsuit as it can be termed an upgrade as stated in marketing laws. This would still hold even if the salesperson uses aggressive tactics and convincing measures to make sure that the teaser product is sold. The United States jurisdiction permits businesses to offer teaser products in a limited quantity, as long as they also inform prospects that the products are in limited amounts. They are also required to make refunds if these items sell out, or make a reduction in prices for similarly costlier products.

Illustrations of Bait and Switch

In the mortgage industry, the bait and switch tactic has gained fame as a marketing tactic that propels businesses forward. Agents or firms in this industry would post low mortgage rates, with the knowledge that a large number of applicants would be unable to qualify for the teaser rates due to its limited amount. As applicants continue to step their feet past the door, they’ll offer a higher rate which these applicants can qualify for, thus giving the agents and firms a higher profit on loans. Automobile financing firms also use the bait and switch tactics to get customers by offering ridiculously low-interest rates on vehicles knowing fully well that only a minuscule amount of a large number of applicants would qualify. This tactic is also used in other sectors, and they include:

• In the real estate sector, a broker may release a building with a ridiculously low price just to get applicants. When applicants troop in, this building would no longer exist, and theyll be forced to receive offers of other similar buildings at a higher price.
• Hotels can offer low rates for rooms, only to add other fees after the customer has already paid for his room
• Fake recruiters can post attractive jobs just to collect resumes from applicants
• Most training programs will lead you in on a cost of $10 per month, and when youre past the door, they’ll bring up an even better offer with higher rates telling you that the initial program has been filled up.