Bait advertising is how businesses hook you in by advertising products or services at irresistibly low prices, but then do not intend to honour that price when a customer enquires about it. A business might suggest an alternative product to the customer or ask them to purchase the original product at a higher price. The business may explain the higher price by claiming they don’t have enough supply of the product.
Importantly, Australian Consumer Law prohibits this conduct. To be found breaching this law, a business only needs to be aware of the circumstances that would prevent them from being able to meet their advertised offer. This is not a very high threshold, and can easily catch out businesses.
Case Breakdown: Wallace v Walplan Pty Ltd
By way of example, let’s look at Wallace v Walplan Pty Ltd (1985). Here, a car dealer advertised for sale a Ford Falcon XD Sedan and a Holden Commodore Sedan. They offered the vehicles for sale at a special price of $2,990 in a full-page advertisement in a newspaper. The ad showed pictures of the cars and the heading said ‘$300 cash deposit or your car as full deposit’. The car dealer advertised each one with a reference to ‘$22.59 a week’. The advertisement’s footnote, however, said ‘prices remain for one week’ and that ‘all vehicles in stock at the date of compiling advertisement’.
When a customer came to purchase the vehicle, the car dealership salesman said the proposals in the advertisement were not available and he would have to speak to his manager. The customer returned later that day to see the manager at which point, another individual intercepted him saying that he had just bought the cars. He then offered them for sale at a higher price. The customer left and later called the dealership. He confirmed with them that the cars were in fact still available for purchase.
This case is a clear example of bait advertising where the dealership did not intend to offer the cars for the purchase price of $2,990. Rather, they used the offer to entice potential customers to their premises and then informed them of the higher price.
How to Protect Your Business
To make sure you don’t inadvertently use bait advertising when offering special prices or promotions, it is important that you think about offering that product for a reasonable period and in reasonable quantities.
This means that you should ask yourself:
- Do I have sufficient stock to satisfy the anticipated consumer demand?
- Is the offer reasonable for the industry or market that my business operates in?
For example, if you sell custom furniture, your promotion promising a handcrafted dining table in two days may not be realistic and could be perceived as bait advertising.
If you need expert advice on your advertising or marketing material, get in touch with us on 1300 544 755. We have assisted many businesses in making sure their advertisements are legally compliant, get across the right message and entice customers to their door.