Bait and Switch
Bait and switch refers to a fraud that is common in retail sales although it is also used in other contexts. At first, merchants bait customers by advertising services or products at low prices but on visiting their store, customers realize that the goods or services advertised at those prices are not available. The customers are then pressurized to consider similar products or services but at higher prices. This is what is known as switching.
The main intention of this technique is to encourage buyers to purchase substituted goods by ensuring that consumers are satisfied by the offered products or services as an alternative for the inconvenience or disappointment of having no goods at all. The technique also functions to reckon the seemingly recovery though incomplete, of the sunk cost that is expended in an attempt to obtain bait. The technique suggests that a seller should not avail the original service or product advertised. Instead, they will demonstrate a similar product that has a higher margin or a more expensive good or service.
To most people, bait and switch is a dishonest tactic used by marketers to make their rate, terms or price attractive to
potential buyers. It is commonly used in the mortgage market to dive business. Mortgage companies or agents post exceedingly low prices or rates when they know very well that most applicants may not qualify for teaser rates. Once customers start visiting their office for inquiries on the low prices or rates, the agent or company will offer higher rates that they might qualify for. This enables the agents to get greater commission.
According to the U.S courts, purveyors who use this technique can be subjected to lawsuits by buyers or customers on the basis of false advertising. These purveyors can be charged in court for trademark infringement by other manufacturers and retailers who profit from selling the product that is used as their bait. However, cause of action does not exist if purveyor does not sell the advertised goods but pushes the competing product aggressively.
Competition Act prohibits retailers from advertising a service or product at a bargain price if they do not have reasonable quantities available. However, a retailer can avoid liability by establishing that non-availability was occasioned by circumstances that are beyond their control, reasonable product’s quantity was obtained and that the customer got rain check after the exhaustion of the supplies.
This technique can cause a retailer to lose their loyal customers and customers who shop from you once may not
consider entering your store again.
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