Bait and Switch

1. 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. The fact that Betty drove three hours in one hundred degree heat doesnt have any bearing on whether or not the dealer must perform in accordance with the published advertisement. Betty spoke with the dealer and she was made a firm promise and he has to honor that promise. She was lured in to the dealership with the advertised truck. According to the Federal Trade Commission (FTC), advertising must be truthful and non-deceptive, must have evidence to back up their claims and cannot be unfair. The advertisement must be a factual representation of services or goods being advertised. (Federal Trade Commission 2011) It appears that the car dealer is involved in a bait and switch transaction which is illegal. Bait and switch is an illegal tactic in which a seller advertises a product with the intention of persuading customers to purchase a more expensive product (Bait and Switch 2011) Bait and switch advertising occurs when a particular item is priced so low that consumers are lured into the store to buy it. This is known as the bait. Once the customer tries to buy the advertised item, they are told that it is sold or they are discouraged from buying it by the salesperson. The store employee may tell customers that the product is actually mediocre and try to convince them to buy a more expensive product. This is the switch. This type of advertising is illegal in most states if the advertised product is not available in reasonable quantities. (Bait and Switch 2011) Depending on the needs, a trustworthy salesperson may try to persuade the customer to buy a better quality item or a different brand at a higher price. There is nothing unethical or illegal about this practice, as long as the customer is given a choice without too

much pressure. (Direct Law, 2010) In the video, the dealer is heard pushing hard for Betty to purchase a more expensive truck. Betty feels that deceptive advertising claims, which are claims likely to mislead reasonable consumers (Halbert & Ingulli, 2010, p. 244), has been made by the dealer. If Betty can prove that the advertisement was untruthful and deceptive, she might have a legal standing. The long drive and the hot weather dont have bearing on whether or not the dealer must perform in accordance with the published advertisement. 2. 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. When Tony stated over the phone that he would give Betty three-thousand dollars firm, it did not imply that he was making an offer, even though both accepted this wouldnt bind the dealership in contract. However, he was making a verbal agreement to give her three-thousand dollars for the trade-in amount and that was firm. This does not bind it in contract but only in verbal agreement which they have to honor. Congress has enacted two statutes that have the greatest effect on advertising: the Federal Trade Commission Act and the Lanham Act. Under the FTC Act, the FTC is given broad authority to regulate advertising. Within this power, the FTC has issued regulations barring advertisements that could be misleading, even if they are true. (Direct Law, 2010) In addition to these measures, the FTC can try to bring the violator into voluntary compliance through informal means such as issue a close down and order them to discontinue; they can bring a civil lawsuit on behalf of people who have been misled; and/or seek a court order to stop false advertisement. (Direct Law, 2010)

For a contract to exist there must be an offer and an acceptance of that offer which result in the meeting of the minds. There must also be a promise to perform and a valuable consideration at a particular time or event when performance has to be made (Contract 2011). It is apparent in Tonys statement that an offer of three thousand dollars was made by Tony for Bettys old truck and accepted by Betty and therefore satisfying elements required for a contract to exist. However, since the conversation occurred by phone, this would be considered an oral contract, or a verbal agreement which is difficult to prove. As an agent, Tony represents the dealership; therefore, if proven that a contract exists between Tony and Betty, the dealership would be bound by the contract. If the business doesnt want to mess up their reputation then they will comply.

3. Explain whether or not advertised specials can be taken advantage of by employees of the advertiser.

An advertised special can be taken advantage by employees of the advertiser as long as that is part of the employers policy. However, they do have to make sure the business is open for consumers to have chance at the advertised products. An advertising that is misleading such as what they have is really considered false advertising. (Advertising 2001) The advertising was misleading because it advertised one truck and the very small print indicated that they only had one truck at that price to sell. This should have been in larger print so that consumers are able to see it without the use of a magnifying glass. The car dealership was drawing customers in the store to sell them a different truck that is more expensive. If the employee purchases in this case a vehicle, then there has to be another one on the lot or the dealership should be able to order another one just like the advertisement states. If they

decide that they cannot do this in anyway, then it becomes bait and switch advertising. This type of advertising switches consumers from what they initial wanted to purchase in the advertisement to something at a higher price or something more advantageous to the advertiser (Federal Trade Commission 2011).

4. Explain to what extent an advertisement binds the advertiser to the terms of the advertisement. The advertisement binds the advertiser to the terms of the advertisement by way of truthful advertising. If the business is advertising a product they should have the product available in the store. If there is only one if that particular item, this should be clearly stated in the advertisement. This would eliminate assumptions from customers. (Advertising 2001) The advertiser is fully bound by the terms of the advertisement. As stated above, advertisement has to meet required FTC laws. The advertiser is responsible for what is being advertised and has a legal duty to not only be bound by the term of the advertisement but to also ensure that the advertisement meet federal laws and regulation. FTC laws require that advertisement be truthful. Which means an advertisement should not mislead a reasonable consumer under any circumstance," (Federal Trade Commission 2011). If the advertisers produce advertisements that mislead customers, theyre held accountable and bound by the term of the advertisement.

5. Explain to what extent an advertisement has to be true.

False and misleading advertisement is illegal (Halbert & Ingulli, 2010, p 244.). Advertisement has to be true under every circumstance. Federal Trade Commission Act requires

that advertising be truthful, non-deceptive, and cannot be unfair (Federal Trade Commission 2011). Advertisers are also responsible for suggested, or implied claims: the misleading messages that consumers are led to believe. (Halbert & Ingulli, 2010, p 244.). Bait and switch is also illegal which means that advertisement must be completely true.

Reference Advertising: a guide for small business. (2001). Retrieved from http://business.ftc.gov/documents/bus35-advertising-faqs-guide-small-business Bait and switch. (2011). Retrieved from http://www.investorwords.com/389/bait_and_switch.html Contract. (2011). Retrieved from http://legal-dictionary.thefreedictionary.com/contract Direct Law, I. (2010). Law That You Can Afford. Retrieved August 20, 2010, from My Lawyer : http://www.mylawyer.com/legalinfo.asp?level=2&id=122 Federal Trade commission. (2011).Retrieved from website: http://www.ftc.gov/bcp/guides/baitads-gd.htm Halbert, T., & Ingulli, E. (2010). Law and ethics in the business environment.