A:

The bait and switch is a advertising technique which can be considered illegal, but in most cases is merely looked upon as dishonest. In a typical bait and switch, a business will advertise prices or rates which are exceptionally low in order to garner attention and motivate customers to inquire. Once the unsuspecting customers arrive at the business, the salesman or business owner will inform customers that the advertised price is no longer available, or that the customers do not meet the requirements to qualify for the advertised price. The salesman or owner will then attempt to sell the customers a product or service which is more expensive as a substitute for the advertised product or service.

The bait and switch has gained the dubious distinction in the mortgage sector, where it may be common place for mortgage providers to advertise unbelievably low rates that for which the vast majority of applicants would not qualify, thus forcing customers to settle for less-desirable rates. (To learn more, see Homeowners, Beware These Scams!)

This question was answered by Lovey Grewal.

RELATED FAQS

  1. What are examples of businesses that exhibit social responsibility?

    Learn what corporate social responsibility means and find examples of socially responsible businesses that contribute measurably ...
  2. Why is social responsibility important to a business?

    Take social responsibility seriously, and your business could benefit from happier, more productive staff members while helping ...
  3. Why are business ethics important?

    Learn why ethics are an integral aspect of management philosophy and how sound business ethics benefit business, both large ...
  4. How important are business ethics in running a profitable business?

    Learn how business ethics as a guiding philosophy within a company can have a drastic impact on long-term profitability and ...
RELATED TERMS
  1. Bidding Ring

    A group of individuals or businesses that conspire to affect ...
  2. Negative Option Deals

    A dubious business practice that involves supplying a typically ...
  3. Bad Faith Insurance

    An insurance company’s appalling or malicious refusal to pay ...
  4. UDAAP

    Misleading or harmful behaviors by those who offer financial ...
  5. Computer Crime Insurance

    An insurance policy that provides protection from crimes committed ...
  6. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...

You May Also Like

Related Articles
  1. Investing

    How Counterfeiting Affects Alibaba's ...

  2. Investing Basics

    How Effective Is The Chinese Wall?

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!