Bait and Switch

By

Darryl Mitchell

Professor Kenneth Pino

Law, Ethics, and Corporate Governance – LEG 500

August 21, 2011

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 has no bearing on whether or not the dealer must perform in accordance with the published advertisement. Betty chose to drive three hours based on the advertisement because she wanted the truck that was being advertised in the newspaper. According to the video, Betty contacted the dealership and spoke with a man, as she indicated, who said he would give her three thousand dollars firm for her trade in. Betty entered the dealership with the newspaper in hand that showed the advertisement for the truck priced at $11,399 and was determined to purchase the truck. Tony was determined to deter Betty from the advertised truck by describing other trucks that were available at a higher price. Tony's sales tactic is known as bait and switch advertising. According to Wikipedia, bait and switch advertising is a way to lure customers into a business by offering to sell a product or service that the advertiser does not intend or want to sell. Once the customer enters the business the salesperson tries to switch the customer from purchasing the advertised merchandise to purchasing something more expensive. In the video, Tony tried to convince Betty to purchase a more expensive truck than the advertised one she was persistent on buying by telling her that the truck had been sold. Tony even showed her the very fine print at the bottom of the ad that required a magnifying glass to read but Betty, however, was determined she only wanted the truck that was advertised in the paper. The Federal Trade Commission requires that advertisements be clear and conspicuously displayed. In the newspaper ad, the print was so small it had to be read with a magnifying glass. Although the print was very small, it was in the ad and it stated only one at this price and provided the invoice number of the truck. Even though Betty had driven three hours in 100-degree heat, and it did not have a bearing on whether or not the dealer had to perform in accordance with the published advertisement, Tony agreed to see what he could do to obtain the truck in the advertisement for her. Betty was responsible for reading the fine print regardless of how small it appeared. She threatened to speak to a lawyer if Tony didn't deliver on the deal. After the threat to obtain a lawyer, Tony seemed to believe he was obligated to deliver the advertised truck to Betty. As a lesson learned, read the fine print before deciding to drive a long distance for a product and that way the customer will not waste his or her time or be persuaded to purchase an item more expensive than he or she can afford.
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. The three thousand dollar offer Tony made over the phone could bind the dealership in contract. Although an oral contract is legally binding, it must contain some key elements. It must have an offer, an acceptance, and consideration. Both parties must be in agreement. In the video, Betty indicated that she had spoken to a man over the phone who said he would give her three thousand dollars firm for her truck as a trade. The video did not indicate if Betty had accepted the offer but considering she drove three hours, I would say that was an acceptance. Tony was not clear on the specific terms of the offer and what was required before he could give Betty the three thousand dollars for her trade. According to the What Makes a Valid Contract, the offer should clearly specify any terms and conditions pertinent to making an agreement, including what will be expected from each party and what each will receive in return as consideration for the contract. For it to be legal and binding, it must have some form of consideration. This means that all parties involved must receive consideration or something of value. Otherwise, it will be considered a gift rather than a contract. The promise of a gift is not necessarily binding, depending upon the circumstances. Usually consideration involves one party giving something such as a product or service, and in exchange the second party gives some form of monetary compensation. In order for Betty to receive the three thousand dollars for her trade in, she must qualify, and purchase a vehicle from the dealership. In the case of the video, if Betty purchased a vehicle from the dealership, she would be eligible to receive the three thousand dollars offered by Tony.
3. Explain whether or not advertised specials can be taken advantage of by employees of the advertiser. Some companies offer discounts to their employees as an incentive to work there, which may not allow employees to take advantage of advertised specials. These discounts are usually available to people who work for a company selling commercial goods. In the video, Tony indicated that Jim, in the service department, had purchased the truck at six a.m. that morning, which shows that an employee can take advantage of an employer's advertised specials. It is the employer's discretion whether or not he or she will allow employees to take advantage of advertised specials. The advertised specials can be taken advantage of by employees of the advertiser until and unless clearly mentioned that the advertised specials are only for the benefits of the general public. Most of the companies disqualify their employees to take advantage of the advertised specials so that the common people could take its advantage and thus promote the company in the market. It is therefore the wish of the advertiser whether he wants to make his own employees eligible or not. The general public can not sue an advertiser on the basis that his own employee has taken an advantage of the advertisement.

4. Explain to what extent an advertisement binds the advertiser to the terms of the advertisement. Generally, an advertisement is not binding to the advertiser. There is a slight difference between offers that are considered binding and those that are considered transient. Generally, if an advertisement specifies a particular product or service, and the vendor changes his or her mind they have the right to withdraw the offer. If the offer is not clearly made to the customer with definite terms, specific services and offers through the advertisement and circulars, or through traditional media, it is only considered an invitation to engage in offer or negotiation. An advertisement binds the advertiser to the terms of the advertisement if an advertisement is very specific and detailed regarding the product offered, the quantity available, and the price. In the video, Betty had the advertisement that listed a specific truck, with a specific price of $11,399 and a quantity of one, which was in very fine print. Because the advertisement was specific in detail, it could have been a binding advertisement had it been made directly to Betty. It was not directly made to Betty therefore, it was just an invitation to engage her in an offer or negotiation.
5. Explain to what extent an advertisement has to be true. Under the Federal Trade Commission Act, advertising must be truthful and non-deceptive. Advertisers must have evidence to back up their claims; and advertisements cannot be unfair (Federal Trade Commission, 2011). The FTC law requires that advertisers have proof to back up express and implied claims that consumers take from the advertisement. Before an ad can be run, it must have a reasonable basis for the claims. This means that objective evidence must support the claim, whatever the claim may be. If the advertiser claims to have evidence, it must provide that evidence. If the information in the ad is not specific, the FTC looks at several items to assist them in determining what level of proof is required. Ads that make health or safety claims should be supported by tests, studies, or other scientific evidence that has been evaluated by qualified people. Scientific evidence must be competent and reliable. The tests and studies conducted must use methods that are accepted as accurate by the experts in the field. An advertisement has to be to true to the extent by which it may affect a consumer’s health or safety.

References
Advertising and Communication Law (2008). Video, Bait and Switch. Southwestern-Cengage
Federal Trade Commission (2011). Guides Against “Bait” Advertising retrieved from http://www.ftc.gov/bcp/guides/baitads-gd.htm August 21, 2011.

Wikipedia (2011). Bait and Switch retrieved from http://en.wikipedia.org/wiki/Bait-and-switch on August 20, 2011.

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