Bait and Switch: Deceptive business practices

baitandswitchI read Barbara Ehrenreich‘s first major book, Nickel and Dimed: On (Not) Getting by in America and I found her treatment of the working poor very well done.

From the back cover:

Millions of Americans work full-time, year-round, for poverty-level wages. Barbara Ehrenrich decided to join them, inspired in part by the rhetoric surrounding welfare reform, which promised that any job equals a better life. But how can anyone survive, let alone prosper, on six to seven dollars an hour?…

Nickel and Dimed reveals low-wage America in all its tenacity, anxiety, and surprising generosity –  a land of Big Boxes, fast food, and a thousand desperate strategems for survival. Instantly acclaimed for its insight, humor, and passion, this book is changing the way America perceives the working poor.

Ehrenreich followed it up with another one called Bait and Switch: The (Futile) Pursuit of the American Dream. I intend to get that one (time/money) but let’s take a look at the term bait and switch.

Bait and Switch

In retail sales, a bait and switch is a form of fraud in which the party putting forth the fraud lures in customers by advertising a product or service at an unprofitably low price, then reveals to potential customers that the advertised good is not available but that a substitute is. This term has lots of other meanings, even outside of the marketing sense.

Function
The goal of the bait-and-switch is to convince some buyers to purchase the substitute good as a means of avoiding disappointment over not getting the bait, or as a way to recover sunk costs expended to try to obtain the bait. It suggests that the seller will not show the original product or product advertised but instead will demonstrate a more expensive product. Other advertising practices, such as the use of sales techniques to steer customers away from low-profit items, depend on many of the same psychological mechanisms as a bait and switch. Wikipedia

In these hard economic times, potential employees are particularly vulnerable to these deceptive practices.

  • Why not advertise a full-time salaried position at, say $60,000 only to offer (3 months down the line) a cheesy 31 day labour independent contractor contract?

And if you question the deal: Send 100% of the work to a “friendly” consultant, possible because the quasi-government agency granting source is very “flexible”.

Personal flexibility or discretion with taxpayers’ money; when disbursing hundreds of thousands of public funds? Hmmm…

These are words not normally used by any forensic accountants I know.

Not much you can do when the employer is in the private sector but when this happens with public funds, it raises the perception, if not reality of wrongdoing.  Any experienced member of  a volunteer board of directors, not-for profit executive or purchasing professional would know that oftentimes reality IS what is perceived.

By acting recklessly, the individual office holder is acting outside their legal authority (ultra vires) and is therefore personally liable for legal action as well as damaging the affiliated organization’s credibility when someone who knows how the law works, holds them accountable.

— see Misfeasance or Malfeasance in Office

One Response to Bait and Switch: Deceptive business practices

  1. Carol Cross says:

    Bait and Switch and Deceptive Advertising and Appearances are always a means to circumvent the laws against these kinds of activities that are so often a prelude to pure and unadulterated fraud.

    In Franchising, it appears that the “package” of a mandated disclosure document that can obscure the actual risk together with an adhesory franchise contract that promises almost nothing to the new buyer provides the “appearance” that something valuable is being sold to the public.

    Franchisee prospects who buy in good faith believe that there must be some purpose for mandated disclosure and the ten-day rule, etc… and have NO IDEA that franchise regulation and mandated disclosure is not protecting them but, in effect, is protecting the franchisor. .

    Fraud under cover of government regulation becomes almost impossible to prove because government, itself, is embarrassed at its caputure by the special interests. Almost, like the three monkeys, they see no evil, hear no evil, and speak no evil about franchise regulation and the rampant fraud of selling unviable and unprofitable franchises to a trusting public. .

    Like

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