Bait and switch is a type of fraud where a business advertises a specifically low bargain price for a product or service attempting to draw the customer into the store for the purpose of actually pressuring them into buying a more expensive product or service. A typical situation where the “bait and switch” practice is used in retail sales occurs like this:
- First, the customer is “baited” by the retail merchant or business by advertising a product or service at a bargained low price in attempt to attract the customer to the teaser rate.
- Once the customer comes into the store to inquire about the advertised bargain price or rate for the product or service, the advertiser will tell the customer that the other product is no longer available and attempt to sell the customer a more expensive product, which is the “switch”.
“Bait and switch” is a crime, and is considered a fraudulent sales tactic that is punishable by law as false advertisement under the Lanham Act. Even though the “bait and switch” practice is a crime, it is commonly used in retail sales business. Bait and switch tactics are regularly used in advertisements for major department stores, electronic and computer stores, and automobile retailers. To avoid prosecution for the “bait and switch” tactics, advertisements usually contain small print stating that the store does not allow rain checks or that the discount on the item is limited to the quantity currently available in the store.
Even though the Federal Trade Commission monitors advertisements and enforces laws that prohibit false advertising, there are plenty of bait and switch advertisements that consumers need to look out for:
- Dealership Ads: A common bait and switch tactic is used by car dealership retailers where they advertise a “one of a kind” low price vehicle for which they claim they have a limited supply in stock. Once the customer goes to the dealership to purchase the car because they like the low price, the dealership claims that the all the cars at that price have been sold, but there are other similar cars available. This could be legal since the dealership could just claim that they had the car, but sold it to other customers.
- While Supplies Last Ads: One common bait and switch sales tactic is offering free products to go along with another priced product just to drive foot traffic to the store. The retail store also limits these free products to a small quantity so that they are gone by the time a majority of the customers arrive at the store.
- Financing: Companies will offer low financing rates for cars and appliances, and will promise that almost everyone is eligible at these low rates in order to drive the customer to the store. The bait and switch in these financing ads is that usually only people with very good credit are qualified for these low interest rates, while a majority of the customers that come in the store do not qualify for the advertised rates.
- Actual Item Not Pictured: Advertisements that show a specific product which looks great on television, but the item that is actually being advertised at that price is not pictured. This would be legal only if the fine print states that the actual item being advertised is not pictured.
The Lanham Act is a federal statute that gives private parties a remedy for false advertising claims. To prevail on a false advertising claim under the Lanham Act, a victim of a bait and switch must prove that the retail store intentionally misrepresented the product in order to pull the customer into the store and lure them into buying another product. The customer must also prove that the store actually never even had the item that was advertised. This is usually difficult, since many retailers include small print in advertisements that states they have a limited quantity available, and they could claim that they actually did run out of the item before the customer attempted to take advantage of the offer.
Since using bait and switch sales tactics is a crime, a victim who is successful in a bait and switch lawsuit may recover any losses that the customer suffered by relying on the fraudulent misrepresentation.
While employing bait and switch tactics is a crime, it is also difficult to prove. Demonstrating retailers’ "intent" is always a tricky task, since most retailers will claim that they merely ran out of the advertised item before the customer attempted to purchase the item. If you have been the victim of a misrepresentation or a bait and switch sales tactic and have suffered some type of loss, a business lawyer will be essential in pursuing the case.