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Bait and Switch Advertising Scams – Definition, Examples & Laws

By Kalen Smith

free cheese trapBait-and-switch is a term for a scam where a business advertises a great product or service for a low price. When prospective customers attempt to buy the product or service, however, they find out that the product is not available. The business uses this opportunity to try to sell customers a more expensive product instead.

Many different businesses have used these scams to entice customers to buy expensive products and services. As a consumer, you need to know how to identify a bait-and-switch scam and protect yourself from being taken advantage of.

How a Bait-and-Switch Works

Bait-and-switch scams appeal to people who want to save money. A company offers a compelling deal, to draw customers to the business. When the customer contacts the business and finds that the deal is not available, the company then tries to convince the customer to buy something else, assuring them that they are still receiving a good deal.

Bait-and-switch scams are commonly found in newspapers and is also a common Craigslist scam. A bait-and-switch does not typically involve selling phony or nonfunctional products; the overpriced products and services work as advertised. Some customers may not even realize that they were victims of a bait-and-switch scam.

Laws Regarding Bait-and-Switch

Victims of a bait-and-switch scam have some recourse when advertised products or services are not available as advertised. The consumer can sue for false advertising. Manufacturers or distributors of the product or service used as bait can also sue the seller for trademark infringement, on the grounds that the seller uses trademarked images of the product or service in their advertisements with no intention to sell them.

Sellers have not committed a crime if they try to push customers towards another product, as long as the original deal is available. Sellers are not liable if they mention in their advertisements that the products have limited availability, so customers should always read the fine print.

Signs of Bait-and-Switch Scams

Some warning signs that you may have run into a bait-and-switch include:

1. Too Good to Be True
Sellers who use bait-and-switch scams attract customers by offering great deals. Before attempting to buy an advertised product or service, ask yourself if the seller can really afford to sell at that price. Legitimate dealers don’t want to lose money on a sale.

Unless a company is going out of business or needs to raise cash to meet some expenditure, rock-bottom prices for high-end products or services are rare. Unbelievably low prices can also signify a different scam, where the seller wants to take your money without actually providing you with the product or service. If the seller is a well-known entity with a good reputation, the risk of becoming a victim is lessened.

2. Fine Print Is Confusing
Advertisements may contain a lot of small details embedded at the bottom or sides. Always read the fine print, especially since misleading or vague fine print may signify a scam. Some scam artists offer disclaimers in advertising, stating that only a limited quantity of items are available. Legitimate businesses make these disclosures as well, but the fine print in ads for bait-and-switch scams can be more difficult to navigate.

The ads may include a tiny footnote that indicates products and services will be sold “while supplies last.” They may also specify other terms, including a timeframe for the deal, or what buyers must do to qualify. If the fine print seems suspicious, you may have stumbled onto a scam.

3. Confusing Pricing Terms
Many bait-and-switch scams confuse buyers with misleading quotes or payment terms. Misleading customers about pricing terms is another form of bait-and-switch. Car dealers who use bait-and-switch tactics advertise monthly payments. These dealers attempt to distract buyers from learning the full details about the length of the payment term. Rather than substituting the product for something else, companies trick customers into accepting different pricing terms.

4. Limited Information About the Seller
Bait-and-switch scam artists try to hide their true identities. Advertisements and websites may not include contact information about the seller, to avoid any potential lawsuits or backlash.

5. Deals Are Final
Bait-and-switch deals are non-refundable, and customers will likely never have the opportunity to contact the seller again. Do your homework ahead of time before buying from a company with this policy.

6. Salesperson Runs Out of Inventory
You may not know that you have found a bait-and-switch scam until you see the seller, look at the website, or talk to the seller on the phone. Be wary if a salesperson tells you a product or service is not available. An honest salesperson will apologize for the inconvenience, and may offer to honor the deal, once new supplies arrive. Be suspicious if the salesperson tries to promote another product instead.

7. Salesperson Pushes a Different Deal
A salesperson who tries to convince customers to accept a different deal should raise red flags. Why would the company try to sell customers something other than the advertised product? This should be a warning sign.

carrot bait scam

How to Avoid a Bait-and-Switch Scam

Fortunately, you can avoid bait-and-switch scams with these tips:

1. Read the Terms and Conditions
Understand the terms and conditions of a deal before attempting to purchase the product or service. Question the legitimacy of a too-low advertised price and the likelihood that the product or service will be available. If you can show that you meet the terms and conditions, a legitimate dealer has no right to refuse to sell to you. Unscrupulous sellers look for ways to fight the terms of an advertised deal. If you suspect a bait-and-switch scam, do not pursue buying the product or service.

2. Compare with Other Sellers
Compare prices for similar products and services offered by other companies. Research why and how a business can offer the product or service for a rock-bottom price. If the company is going out of business, you may have found a legitimately good deal. If extenuating circumstances don’t seem to exist, and you cannot find a legitimate reason for the low price, you may have discovered a scam.

3. Ask for a Rain Check
If the advertiser did not specify “until supplies last” on their ad, but they do not have the items in stock, ask for a rain check. They may apologize, offer to honor the sale at a later time, and present you with a rain check.

4. Clarify the Pricing Terms
Many bait-and-switch deals have open-ended or confusing pricing terms. Make sure to clarify the pricing before finalizing the sale. Don’t commit to the purchase if the seller only offers vague information while attempting to close the sale.

5. Don’t Agree to a Purchase If You Feel Uncomfortable
Companies using bait-and-switch tactics try to appeal to buyers’ fear of loss, especially in brick-and-mortar businesses. They try to make you feel that if you don’t purchase something, you made a trip for nothing. Don’t fall for this strategy. You may have spent a few dollars on gas, but don’t compound the expense by losing more money. You can purchase another item if the one you want is out of stock. The replacement item should be fairly priced, and you should feel comfortable buying the product.

6. Research the Seller Beforehand
Learn what other people have to say about the seller. Never do business with someone who has a shady reputation to avoid becoming a victim of fraud. Learn more about the seller by talking with other buyers, and checking out reviews online at sites like RipoffReport.com.

Review the company’s Better Business Bureau report, and local court records, to see if the seller has had any complaints or has any pending lawsuits. You may also choose to buy the product or service from larger retailers, like Amazon or Walmart. These companies have solid reputations for good customer service, and for treating customers fairly.

7. Get a Friend to Go with You
A friend can help you to be more objective about alternative purchases if the original deal is no longer available. Friends also help put things in perspective, and give you the strength to stand up to the seller if you suspect they are using bait-and-switch tactics.

Many reputable salespeople try to encourage customers to buy a different product if a product is out of stock. That does not qualify as bait-and-switch, as long as they give you a choice, and don’t put too much pressure on you to make a purchase.

Final Word

Believe it or not, many companies use bait-and-switch tactics. If a deal seems too good to be true, be wary. Check the terms and conditions of any sale or special before finalizing a purchase. You may find that the terms are vague, and that the item you want to purchase is not available.

Never buy an item outside of your price range or make a purchase that makes you feel uncomfortable. Understand the terms of any special before you commit to making a purchase, to avoid unexpected costs when you have to start making payments.

Have you or a family member been the victim of a bait-and-switch scam?

(photo credit: Shutterstock)

Kalen Smith
Kalen Smith has written for a variety of financial and business sites. He is a weekly contributor for Young Entrepreneur and has worked as a guest blogger on behalf of Consumer Media Network. He holds an MBA in finance from Clark University in Worcester, MA.

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