Bait and Switch
Law, Ethics, and Corporate Governance
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 amount of time it took for Betty to travel to Rally Motors is no more significant than the weather and temperature. Because Betty experienced a great deal of inconvenience traveling to the dealership through extreme heat for an extended period of time, does not make it mandatory for the car dealership to accept Betty’s offer for the advertised vehicle. The critical piece of the puzzle is what was the driving force behind her ...view middle of the document...
It is illegal for Rally Motors to advertise a product, in this case a truck for $11,399. when the company has no intention of selling that truck at that price. Instead, it plans to sell a potential customer, Betty for example, one of their more expensive vehicles available for sale.
According to the Federal Trade Commission’s Deception Policy Statement, an ad is considered to be deceptive if it contains a statement, or omits information, that is likely to mislead consumers acting reasonably under the circumstances and is “material,” that is, important to a consumer’s decision to buy or use the product.
Betty could argue that she relied upon the ad in the paper to justify her three hour drive, the price in the ad was “material” for her to make the decision to buy the truck as well as the offer to buy her truck for $3,000. The fact alone that Betty had to endure a little adversity to get to the dealership does not obligate the dealership to accept her offer. But for the ad in the paper and the offer made by Tony, it is unlikely she would have made the trek to Rally Motors.
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 spoke with Betty over the phone, there were no conditions attached to his offer. When they discussed her truck as a trade in, he stated he would give her “three thousand dollars firm,” he did not stipulate “upon inspection by our service manager,” “I would have to see the car first,” or at the very least, “I need to get my manager’s approval.” By stating “three thousand dollars firm,” Tony was speaking as an agent of the dealership and he could be binding Rally Motors in a contract should Betty accept. Betty could maintain Tony’s statement was an offer and by her making the trip to Rally Motors she accepted his offer for her trade-in.
Tony’s behavior further illustrates the need for laws and regulations prohibiting bait-and-switch advertising. The most important aspect of bait advertisement is to obtain a lead of someone who is interested in buying the advertised merchandise. Tony then proceeds to entice Betty to the dealership when he offered her three thousand dollars for her current vehicle, which for all intents and purposes, he never intended to do, thereby “baiting” Betty.
The switch came about after their introduction. Betty made mention of her phone call and the offer for her current truck. Tony admitted to speaking to her and then suddenly there was a condition of his offer, he had to take a look at it first. And since he knew the truck in the ad was not the truck he wanted to sell, he immediately began to discuss all the wonderful trucks available and what great bargains they were.
Explain whether or not advertized specials can be taken advantage of by employees of the advertiser.