Thursday, April 2, 2009

Legality of Bait and Switch Programs Online

The bait and switch strategy has been a scam from long before the web ever appeared. The legality of the strategy online is just as weak as it is offline.

What is a bait and switch program? The strategy has been tweaked a bit for the online world, but the game is played like this. I offer you a sample of something in exchange for your paying for shipping and handling. You give me a credit card for this. I then sign you up for monthly membership or maintenance charges.

As a scammer, my goal is to not charge you too much because I don't want you to fight the charges. I'll also use a name not affiliated with my offer so you aren't entirely sure what the charge is. The scam is based on the concept of consumer laziness. As long as I don't charge too much, you wont get motivated enough to take action to stop the charges.

Is this scam legal? Yes and no. If nobody complains, the legality doesn't matter. For those that do complain, the scammer will usually have a clause buried in the terms and conditions for the site that allow them to take the action. So, are you just out of luck when this happens? No. There are a couple of things you can do.

The first thing is to always pay online with a credit card. When you get your credit card statement, check it for unauthorized charges. If you find them, then you should call and complain to the credit card company. They company will "chargeback" the expense and, if enough complaints come in, cancel the account of the scammer.

It is important to realize that your debit card should not be used on the web. Why? It is not considered a credit card. Yes, this is true even though it says "Visa" or "MasterCard" on the front. The rules are different and the charges are treated akin to a check being drawn on your account. In short, you have far fewer rights and charging back the fraudulent charges is very difficult.

The next step is to complain to the FTC. This is more of a global solution. While it will not help you directly, the FTC will move against the scammer if enough complaints come in. This will at least put an end to their efforts, which is a good overall result.

As you can see, the key to fighting the bait and switch scam online is two fold. First, only pay with credit cards. Second, make sure to check your statements closely and contest charges from companies you've never heard of.

Gerard Simington writes articles about internet law for

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