Several times a year, the Consumerist inbox is flooded with e-mails from people who are livid because they purchased something online at a huge discount only to have the retailer cancel the order, claiming it was a pricing error and the item should never have been listed at that price. Some people are quick to call this “bait-and-switch,” and state very confidently that the retailer is somehow legally obligated to honor the original price. These people are mistaken.

The latest example of this issue can be seen in the response to a $1,000 Dell laptop advertised on the Army and Air Force Exchange Service website for a mere $25.

A 97.5% discount is quite obviously a pricing error, but that didn’t stop people from logging on in an attempt to snap up the computers.

AAFES and Dell quickly caught onto the mistake and canceled the placed orders, saying that those whose credit/debit cards were charged would be refunded in 2-3 days.

The online reaction has predictably been negative, with the expected cries of “false advertising” and “bait-and-switch.”

But the Federal Trade Commission guidelines on what constitutes bait-and-switch are quite specific.

The main thrust of the “bait” part of that scam is that there is a deliberate intention to deceive the customer into shopping for the initial offer (for example, a deeply discounted computer) while having no intention to ever sell them that product in the first place.

“Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser,” writes the FTC. “The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised.”

Then there’s the “switch,” wherein the retailer uses that bait to lure the consumer into either buying a more expensive item or to paying more for the originally advertised product than was initially listed.

In the AAFES/Dell instance, it would be hard to imagine what Dell or AAFES would be gaining by falsely advertising a $25 laptop. If, rather than automatically cancelling the orders and refunding the purchases, the seller had contacted buyers and said, “Sorry about that, but here’s a $350 netbook you should buy instead,” then you might be able to argue bait-and-switch.

And even in the case that bait-and-switch can be proven, that does not mean that the seller is required to honor the original price. Sometimes, such as this Walmart example, the retailer will do something to show that they understand why you’re irritated.

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