What is the "bait & switch" technique?

By Investopedia Staff AAA
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 was Rupert Murdoch's role in the wiretapping scandal?

    Learn what Rupert Murdoch and son James admit about their roles in the wiretapping scandal involving the 168-year-old British ...
  2. How do economists define moral hazard?

    Find out how economists define moral hazard, and learn about some of the most common explanations offered for instances of ...
  3. How do interpersonal skills influence a business culture?

    Interpersonal skills are vital to business culture because they determine not only how a person interacts with others, but ...
  4. What moral hazards are present with salaried employees?

    Discover that moral hazards are a common problem facing many companies today. The good news is that there are plenty of ways ...
RELATED TERMS
  1. Bad Faith Insurance

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

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

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

    A director's responsibility to act at all times in the best interests ...
  5. Duty Of Care

    One of two primary fiduciary duties of directors, the duty of ...
  6. Adverse Domination

    A legal doctrine that allows regulators to bring litigation against ...

You May Also Like

Related Articles
  1. Investing Basics

    How Effective Is The Chinese Wall?

Trading Center