Bait and Switch Scam

A sales strategy that entices customers with a low rate for a product or service, but later encourages them to purchase at a higher rate.


What Is the Bait and Switch Scam?

It is a fraudulent strategy used by a company, or an individual seller, that advertises low-priced goods with the goal of subbing them with pricier items at the time of sales. Companies use lower pricing to attract customers or “bait” them. They then attempt to do a “switch” by selling them a different good; or in most cases, they try to sell an item of lower quality than the advertised good.

How Does the Bait and Switch Scam Work?

The scam starts with a company advertising its products at a lower price than the current market price to “bait” customers. For example, a laptop, which is usually priced at $1500, is being advertised for $400. In most cases, the deals are too good to be true, but many customers still fall for them. When a customer goes to the shop, they are usually given an excuse for the advertised product being out of stock and are informed that similar options are available, typically at higher prices. As the customer has already gone to the store, they usually buy the substitute for a higher price. 

Exceptions to the Bait and Switch Scam

There is a fine line between a bait-and-switch scam and a genuine marketing strategy. Customers should be aware of this distinction, as falsely accusing a vendor can have serious legal consequences. Although “out of stock” is a crucial element used in this scam, many companies do face this situation in reality if the demand of the product rises too high. For instance, an airline might offer a discount to the customer but only on the condition that the discount is applicable to the first five customers. This type of situation cannot be declared as a bait and switch tactic because the seller clearly stated the offer’s details.

Pricing errors are also another instance that is sometimes perceived as bait and switch. It is a genuine mistake by the vendor who displayed the wrong price. The mistake is easily spotted in most cases, like if a TV is on sale for $70. In such a case, the customer may end up placing an order for the product at the wrong price. However, when the vendor discovers the mistake, they follow up and either cancel the order or issue a refund if the consumer has already paid for the item.

Penalty for Bait and Switch Advertising

Using a bit and switch strategy is unlawful and wrong. If a victim falls for such a strategy, they have a right to report the vendor to the relevant authority. The penalty depends on the gravity of the case, which may include a hefty fine plus legal fees and damages.