Bait-and-switch
Lure buyers with a deal that vanishes, then sell them something pricier.
What it means
Bait-and-switch is advertising an attractive offer the seller does not intend to fulfil, in order to draw a buyer in and move them to something dearer: the advertised item proves unavailable, downgraded, or disparaged, and a costlier substitute is ready. It works mainly on the sunk cost of the visit: once a buyer has travelled, the alternative to buying is restarting the search elsewhere, which hands the seller a bargaining window it would never hold against a screen of side-by-side prices. A commitment mechanism is often invoked as well, but the low-ball evidence behind that is modest (around r = .16) and partly drawn from a lab that has since seen retractions. The legal test turns on intent rather than an empty shelf. It matters as a legal bright line in commerce — one whose welfare economics is, unusually for a banned practice, still genuinely disputed.
How it works
The bait is a traffic device, not a product. A price well below the plausible market rate generates visits, and the visit is the point. Once a buyer has travelled, that cost is spent and unrecoverable, and the alternative to buying is restarting the search elsewhere. This hands the seller a short window of bargaining power it would never hold against a screen of side-by-side prices. The switch script does the rest. Commission structures can make the bait unprofitable to sell, so staff may need no instruction to steer away from it — which is why the FTC treats compensation designed to discourage selling the advertised product as evidence of the scheme (238.3(f)).
Where the law draws the line
The test turns on intent, not on an empty shelf. The FTC's Guides Against Bait Advertising define the practice as an alluring but insincere offer to sell something the advertiser does not intend to sell. Because intent cannot be observed, the Guides work backwards from conduct that betrays it: refusing to show or demonstrate the item, disparaging it or its warranty, failing to stock reasonable quantities without disclosing the limit, refusing orders for delivery within a reasonable time, demonstrating a defective sample, and paying salespeople in ways that penalise selling the advertised goods. The EU's Unfair Commercial Practices Directive blacklists a subset of the same conduct: Annex I point 6 covers refusing to show the item, refusing orders or delivery within a reasonable time, and demonstrating a defective sample, all where the intent is to promote a different product; point 5 separately covers advertising a price the trader has reason to believe it cannot supply in reasonable quantities. Disparagement and commission design are FTC-side only. Selling a few units does not cure the scheme.
The economics is genuinely contested
Gerstner and Hess (1990) argued a ban can hurt the people it protects, because bait pricing sharpens price competition and the visit creates value through in-store information; they urged the FTC to revisit its standards. Lazear (1995) later showed false advertising can be a rational equilibrium in its own right: the bait draws enough shoppers to pay for itself even though some, anticipating it, stay home. Wilkie, Mela and Gundlach (1998) rebuilt the model, separated the stock-out from the up-sell, and found any gain traces to a salesperson explaining features, which needs no deception. Hess and Gerstner replied in the same issue and the disagreement stands: rival models on different assumptions, not field evidence.
Related but distinct
Low-balling is the closest neighbour and is not the same thing: it keeps the product and worsens the terms after you agree, where bait-and-switch replaces the product. It supplies the commitment mechanism people assume drives the switch, and it does move behaviour, though less than intuition suggests. A meta-analysis of 23 studies covering roughly 4,700 people puts it near r = .16 (Pascual et al., 2016). Treat that as soft: Burger and Caputo (2015) find it strongest when the added cost is small, Pascual's team find the opposite, and Nicolas Guéguen — a co-author of that meta-analysis, whose own low-ball studies are among the pooled effects — has since drawn multiple retractions and expressions of concern. A loss leader, genuinely sold, is not bait.
Spotting it and defending against it
The tell is a sequence, not a single fact. Stock-outs happen; what marks a switch is that the advertised item is gone, a dearer substitute is ready, and the reason is already prepared. The defence is procedural. Fix the item and your ceiling price before you travel, and treat the trip as money already gone rather than a reason to accept a worse deal. Ask for a rain check or a written order at the advertised price: a seller who meant the offer can produce one, and the request costs nothing. For firms, compliance is operational: stock sensibly, disclose limits in the advertisement, honour orders, and avoid commissions that punish selling the advertised item.
Examples
A store advertises a cheap laptop, then claims it's 'sold out' and pushes a much pricier model.
A letting agent advertises a bright flat at a low rent; on arrival it was 'just taken this morning', but three dearer ones are conveniently free to view right now.
A gym advertises a cheap monthly membership; the tour ends with a salesperson explaining that this tier cannot use the classes or the weights room, and steering you to one three times the price.
A recruiter advertises a named senior role; after four rounds the candidate is told that req is 'on hold' and is offered a junior post at lower pay, months of interviews already sunk.
A lender advertises a headline fixed-rate mortgage; at signing the applicant is told that product has been withdrawn and is steered to a variable-rate loan, the survey and valuation fees already spent.
First described in Long-recognized deceptive marketing practice.
Key references
- Pascual, A., Carpenter, C. J., Guéguen, N., & Girandola, F. (2016). A meta-analysis of the effectiveness of the low-ball compliance-gaining procedure. European Review of Applied Psychology, 66(5), 261-267. doi.org/10.1016/j.erap.2016.06.004
- Burger, J. M., & Caputo, D. (2015). The low-ball compliance procedure: A meta-analysis. Social Influence, 10(4), 214-220. doi.org/10.1080/15534510.2015.1049203
- Wilkie, W. L., Mela, C. F., & Gundlach, G. T. (1998). Does 'bait and switch' really benefit consumers? Marketing Science, 17(3), 273-282. doi.org/10.1287/mksc.17.3.273
- Hess, J. D., & Gerstner, E. (1998). Yes, 'bait and switch' really benefits consumers. Marketing Science, 17(3), 283-289. doi.org/10.1287/mksc.17.3.283
- Lazear, E. P. (1995). Bait and switch. Journal of Political Economy, 103(4), 813-830. doi.org/10.1086/262004
- Gerstner, E., & Hess, J. D. (1990). Can bait and switch benefit consumers? Marketing Science, 9(2), 114-124. doi.org/10.1287/mksc.9.2.114