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What Every Business Should Know About Bait And Switch Advertising
Bait and switch advertising is a form of false advertising because what the merchant intends to sell is significantly different from what which drew the potential customer. Bait and switch advertising laws apply to all forms advertising including, print, direct mail, and television.
Some unscrupulous business try to get around these rules through different schemes, but often find themselves in trouble. There are state laws, the Federal Lanham Act, and FTC rules that attempt to regulate this particular practice.
The law regulates these practices and does not necessarily require that the advertisement have words that are misleading. In one case the advertisement showed three pieces of furniture for sale, but upon arriving and making a purchase the buyer discovered that only one piece of furniture was included in the advertised price. There was no text, just pictures and this was deemed to be bait and switch, since the merchant only intended to sell the one piece for that advertised price not the three piece set of furniture. In another case bait and switch was found when the merchant convinced the customer to purchase more expensive items by making the advertised items unattractive in appearance.
The FTC defines bait and switch advertising as meaning alluring but insincere offers to sell a product or service, which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise in order to sell something else on a basis more advantageous to the advertiser. The purpose of the advertising is to obtain leads. Most states courts use these guidelines in determining whether or not a violation under state law has occurred. Even if the particular state where the advertisement took place does rely on this definition, a violation can occur under the FTC.
The FTC has also set rules to determine if a bait and switch advertisement has occurred. These factors are as follows:
(1) has the merchant refused to show, demonstrate or sell the produce offered in accordance with the advertised terms of the offer;
(2) has the merchant disparaged the advertised product or service by acts or words or disparaged the guarantee, credit terms, availability of service, repairs or parts;
(3) did the merchant have adequate supply or clearly disclose the supply on hand;
(4) did the merchant refuse to take orders to deliver within a reasonable time of the advertised product;
(5) did the merchant demonstrate a product which was defective, unusable or impractical for the purpose represented or implied in the advertisement;
(6) did the merchant have a sales plan or method of compensation that discouraged or penalized sales people that sold the advertised product.
Bait and switch has been applied to case where a lender advertised one rate and changed the rate at a later time. In another case a sales person sold a trailer and the boss called the customer and denied the salesperson's authority to make the sale. Not delivering what was ordered was deemed to be a bait and switch. This often occurs where the merchant upgrades the product, but even so it would be deemed to be io violation. This often a recurring theme on Ebay where the seller often switches the product to a higher quality product without the buyers consent.
California has a very powerful statutory scheme that is designed to discourage these type of deceptive and misleading practices, as such business should be very cautious in their advertising efforts.
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