DEFINITION of 'Misselling'

The ethically questionable practice of a salesperson misrepresenting or misleading an investor about the characteristics of a product or service. In an effort to make a sale to a potential customer, a financial products salesperson could leave out certain information or describe a financial product as something the investor urgently needs, even though sound financial judgment would come to the opposite conclusion.

BREAKING DOWN 'Misselling'

A good example of misselling can be seen in the life insurance industry. Consider an investor who has a large amount of savings and investments but no dependent children and a deceased spouse. This investor would arguably have little need for whole life insurance and, therefore, an insurance salesperson describing the product as something the investor urgently needed to protect his or her assets in the event of death could be considered a case of misselling.

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