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Bait & Switch

Bait & Switch Jamie Chiappetta Law, Ethics, and Corporate Governance Professor Boneita Campbell August 21, 2011

Bait & Switch

Introduction The bias of advertising has existed as long as advertising has. Advertising is the art of applying bias to sell. It is the designed to make something attractive, to make something desired, or needed through the act of creating simple psychological games. Ads are created to stimulate a sense of need in consumers. As seen in this case, there are many companies that run misleading ads as a means of luring customers into their businesses. The Federal Trade Commission Act (FTCA) prevents unfair competition methods and unfair or deceptive acts that may affect business commerce. Betty drove three hours in one-hundred degree heat. Explain if this fact has any bearing on whether or not the dealer must perform in accordance with the published advertisement.

According to the Federal Trade Commission it's illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price. We see many companies, especially car dealerships, where they try to entice a customer by using deceptive advertising means. Customers are baited by advertising for a product or service at a low price, then the customer discovers that the advertised good is not available or has been switched to a more expensive product. Advertisement is a means of getting consumers to go to the company and purchase the product if they choose to do so. The advertisement doesnt create a binding agreement between the costumer and the business. After seeing the advertisement, the customer may or may not accept the invitation and go to the business to inquire about the offer. With respect to the hardship a customer undergoes to reach the place of business should not matter to the seller, as he has just invited the customers through an ad and has not assured of a guaranteed transaction. In this case, Betty an old woman,

Bait & Switch

drives for three hours in one-hundred-degree heat, for the transaction, does not matter to the dealer, as he had not assured her of the sale at the price she happens to have seen in the newspaper, although Betty argues that she relied to her detriment on the advertisement. The dealership has no way of knowing how long it takes someone to get to their establishment. Bait and switch has nothing to do with the drive to purchase goods. When Tony said over the phone three thousand dollars firm, explain whether or not he was making an offer that, if accepted, would bind the dealership in contract. A contract is a legally enforceable agreement between two or more parties with mutual obligations, which may or may not have elements in writing. Contracts can also be formed orally (parol contracts). The breach of a contract can result in damages or monetary compensation (Wikipedia.com). Everyday people engage into oral agreements with companies for purchases of goods or services. Many times the agreement is made with no intention or feeling that they need a written document. Oral agreements are as legally binding as a written one. Betty could argue that she justifiably relied to her detriment on Tonys oral promise. Tonys actions clearly portray all the behaviors relevant to a classic bait and switch activity. He has further lured Betty to the dealership by stating that he would give her three thousand dollars for her car, which he never intended to do. Tony didnt let Betty know that they needed to see or have the service manager inspect the car first before giving her the money. Instead, Tony said, Three thousand dollars firm. This is clearly an offer made over the phone to Betty. Before Betty undergoing her journey, she called Rally Motors to ensure the validity of the advertisement and spoke with Tony. Tony made a commercial speech with Betty in regards to the ad and the offer of $3k for her car. A commercial speech is economic in nature and usually has the intent

Bait & Switch

of convincing the audience to partake in a particular action, often purchasing a specific product with intent to make a profit (Wikipedia.com). Explain whether or not advertised specials can be taken advantage of by employees of the advertiser. Many companies often disqualify their employees from special offer, specials, and contests in order to avoid the appearance of inside dealing or impropriety. On the other hand, employees are also consumers. They can certainly take advantage of the advertisement. Many retail stores encourage their employees to purchase their products and offer them discounts as an incentive.

Explain to what extent an advertisement binds the advertiser to the terms of the advertisement.

In my opinion, advertisements do bind the advertisers to the terms of the advertisement. Consequently, the behavior of advertisers is a function of what and how they advertise. Bait-andswitch advertising is generally prohibited because it involves behavior by advertisers that are not consistent with their advertisements. Mistakes in advertising are treated differently from deceptive ads. Consumers are free to decide where they want to make a purchase a product or service. Consequently, if the retailer advertises a particularly good bargain and the customer is unable to purchase that bargain, the customer always has the ability to leave and go elsewhere. While this argument may be justifiable in regard to frequently purchased items, it does not necessarily hold for infrequently purchased items, such as automobiles. In particular, if an individual invests significant resources in order to pursue an advertised special, as in Bettys case, there is the issue of detrimental reliance. Detrimental reliance is taking an action or failing

Bait & Switch

to take an action because of a representation made by another person that turned out to be untrue (http://financial-dictionary.com). Advertisers are responsible for suggested or implied claimsthe misleading messages that consumers are led to believe (Halbert & Ingulli, p. 244). Explain to what extent an advertisement has to be true. Under the Federal Trade Commission Act, advertising must be truthful and nondeceptive, advertisers must have evidence to back up their claims, and advertisements cannot be unfair (http://business.ftc.gov). The manner in which the dealership advertised the truck for sale is an obvious act of deceptive and unfair advertising. The FTC actually addresses this type of advertising as bait and switch advertising and offers specific guidelines to businesses to prevent participating in this type activity. The media has an enormous influence everywhere, so advertising, using media as its vehicle, is a pervasive, powerful force shaping attitudes and behavior in today's world. In today's society, advertising has a profound impact on how people understand life, the world and themselves, especially in regard to their values and their ways of choosing and behaving. We do come across some advertising that is simply and deliberately untrue. It is not that the advertisement says what is false, but that it can distort the truth by implying things that are not so or withholding relevant facts. Deceptive advertising claims are those likely to mislead reasonable consumers, causing them to change their conduct (Halbert & Ingulli, p. 244). In legal terms, advertising is considered commercial speech, speech on behalf of a company or individual with the purpose of making a profit, and it's treated differently than other kinds of speech. Truthin-advertising laws are designed to protect consumers by requiring advertisers to be truthful and able to back up their claims. The Federal Trade Commission is responsible for enforcing these

Bait & Switch

laws, but the agency doesn't actively search for inaccuracies; it only follows up on complaints (Clifford, 2010). Conclusion Laws are created to protect consumers from false advertisement. These laws recognize that advertising plays an important role in helping consumers decide which products to purchase and that false, deceptive and misleading advertising can undermine consumers' purchasing decisions. Purchasing a car is a very important decision. Consumers expect advertisements to provide accurate information for to help them in deciding what kind of car to purchase, and from what dealership to purchase. When advertising is deceptive or has the capacity to mislead consumers, it makes it more difficult for them to make informed decisions about their purchases. Consumers need to educate themselves in avoiding being victims of deceptive advertisement and know that there are laws that protect them.

Bait & Switch References

Halbert, T. & Ingulli, E. Law & ethics in the business environment: 2010 custom edition (6th ed.). Mason, OH: South-Western Cengage Learning.

Clifford, S. (March, 2010). Truth in advertising? How truthful do ads have to be and how much should we believe? New York Times. Retrieved August 19, 2011 from http://findarticles.com/p/articles/mi_m0BUE/is_10_142/ai_n50364887/

Commercial Speech retrieved from http://en.wikipedia.org/wiki/Commercial_speech

Contract retrieved from http://en.wikipedia.org/wiki/Contract

Bureau of Commercial Protection. A Guide for Small Businesses . Retrieved August 19, 2011 from http://business.ftc.gov/documents/bus35-advertising-faqs-guide-small-business

Detriment Reliance retrieved August 21, 2011 from

http://financial-dictionary.thefreedictionary.com/detrimental+reliance

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