DEFINITION of 'Bait And Switch'
A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch").
BREAKING DOWN 'Bait And Switch'
The bait and switch tactic has gained notoriety in the mortgage market as an unscrupulous marketing tactic meant to drive business. In a mortgage bait and switch an agent or company will post exceedingly low mortgage rates, knowing full well that the vast majority of applicants will be unable to qualify for these teaser rates. Once customers begin to come into the office to inquire about the low rate, the agent will proceed to offer them the higher rates they are more likely to qualify for, thus earning greater commission.