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's the difference between legal defalcation and illegal defalcation?

    Discover what is meant by the term ''defalcation'' and how it can be used in multiple contexts to describe illegal or legal ...
  2. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't ...
  3. What is an antitrust law?

    Antitrust laws - also referred to as "competition laws" - are statutes developed by the U.S. Government to protect consumers ...
  4. Under what circumstances can an IA choose to sell a security for a client without ...

    A. When the transaction is less than $5,000B. When the IA decides only how many shares to sellC. When the client tells the ...
RELATED TERMS
  1. Duty Of Loyalty

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

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

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

    The payment of something of value to an individual with the goal ...
  5. Copyright Infringement

    The use or production of copyright protected material without ...
  6. Net Neutrality

    Network neutrality requires all Internet service providers (ISPs) ...
Related Articles
  1. Don't Get Sued: 5 Tips To Protect Your ...
    Entrepreneurship

    Don't Get Sued: 5 Tips To Protect Your ...

  2. Are You Trying To Get Sued?!
    Insurance

    Are You Trying To Get Sued?!

  3. How To Lie With Financial Statistics ...
    Fundamental Analysis

    How To Lie With Financial Statistics ...

  4. 4 History-Making Wall Street Crooks
    Personal Finance

    4 History-Making Wall Street Crooks

  5. Save The Earth: Become A Capitalist
    Economics

    Save The Earth: Become A Capitalist

Trading Center