A deceptive marketing scheme resorted to by consumer good vendors when they advertise a genuine product and offer it in the store, but onc the customer arrives, the merchant pretends that they are out of stock, or denigrate the product, trying to sell a higher priced alternate to the consumer.
"(T)he trick is to lure the customer by advertising, at a very attractive price, a well-known and reputable product and then to denigrate it in favour of a product manufactured by a competitor and offered at an obviously higher price" (Sony v Multitech 1993 49 CPR 3d 348).
Canada's Competition Act prohibits "bait and switch" techniques and defines it as follows:
"A person ... who advertises at a bargain price a product that the person does not supply in reasonable quantities having regard to the nature of the market in which the person carries on business, the nature and size of the person's business and the nature of the advertisement."
An American decision, often cited in Canada, is Electrolux Corp. v. Val-Worth Inc. 190 NY Supp 2d 277 which states as follows:
"In 1952, respondents arranged for television advertising with a television promoter. They agreed that the commercials would furnish telephone numbers for prospective inquirers and that telephone responses would be turned over to respondents for $2 to $3 each. During the commercials which were broadcast over four television channels, the actor or salesman exhibited a "rebuilt Electrolux", described it as such in glowing terms and offered it for $14.95. Telephone numbers were also furnished for prospective inquiries.
"Adler, an investigator hired by the plaintiff, called one of the telephone numbers furnished during the commercial and requested a demonstration. Subsequently, a salesman, arrived at Adler's home where he demonstrated and sold to him a rebuilt machine. But then he attempted to sell a new machine not manufactured by the plaintiff which he claimed was a better machine. However, the investigator refused to make any further purchase and subsequently turned the rebuilt machine over to plaintiff's engineers who examined it. Although the motor and body were manufactured by Electrolux, some of the accessories were not.
"The proof also demonstrates that respondents sold new machines manufactured by several of plaintiff's competitors but that respondents did not mention these machines on the commercials. Rather, they offered the rebuilt machines at $14.95 for the purpose of attracting prospects to whom more expensive new machines not manufactured by plaintiff might be sold. Furthermore, respondents' salesmen were not compensated for selling the "rebuilt Electrolux" but rather their compensation depended on sales of the other machines.
"In June of 1953 Electrolux brought an action seeking injunctive relief, as well as damages. The court ... found that the procedure was to endeavor to sell the "rebuilt Electrolux" and then to "switch" the transaction to the new machine by calling the "rebuilt Electrolux" "just a lot of junk", and by saying that it looked "silly" and by disparaging it generally.... Moreover, the salesman would be instructed not to permit the rebuilt machine to leave his hands but rather to disparage it and to try to sell the new machine instead. In addition the rebuilt machine could not be sold profitably for $14.95 for the initial cost and business expenses compelled respondents to rely on the sale of the higher priced machines in order to make the operation a paying one. In short, the court found that the telecasts were calculated to give the impression that a used Electrolux with Electrolux parts, which retained the quality associated in the public mind with plaintiff's products, was obtainable at a low price whereas respondent's actual purpose was to discourage the purchase of the advertised machines and induce the public to buy costly machines of makes other than Electrolux."