Bait and switch is a straightforward form of fraud, where a store, or other entity such as a bank, advertises a service or product at a low price. When the customer arrives to buy that product or service, the advertised item is not available and the customer is switched to a more expensive product.
In the United States, courts have rendered decisions that the person who uses bait and switch techniques may be subject to a lawsuit for false advertising. They may also be sued for trademark infringement by their competition. On the other hand, consumers may not sue if the seller is selling the goods advertised, but is trying to peddle a competing, higher priced product.
Companies in the U.S. may also advertise a loss leader item and stock a limited amount. If they sell out, they may avoid legal liability by clearly spelling out in their ads that they only have limited quantities or by giving a consumer a rain check for the item.
Other situations in which bait and switch techniques may be used involve advertising a job that gives the applicant a misleading idea about compensation packages or working conditions. Many airline travelers have been victims of bait and switch techniques relating to airline fees and hotel fees/resort fees. Hotels advertise low prices, but charge customers a resort fee when they check in.
Bait and switch also occurs in politics. For example, caption bills offer to make changes in the law and the proposed bill is given a simple title. This is the bait. The bill is introduced to the legislature, where the real intention is demonstrated, by making substantial changes to the wording of the original bill. This is the switch.
Mortgage lenders can also perpetrate a form of bait and switch, by offering low interest rates for new buyers, and when the buyers arrive to take advantage of the deal, they find the rates have been switched to a higher one.