You’ve probably seen it before: a deal that looks too good to miss, only to find out the product “isn’t available”, “just sold out”, or “was only in stock for one person in the whole country”.
That’s where the concept of bait advertising comes in. And if you’re running a business in New Zealand, it’s not just a marketing issue - it can be a legal one.
This 2026 update is designed to keep the guidance current for today’s fast-moving online ads, social media promotions, and e-commerce sales tactics. The good news is that you can absolutely run promotions and discounts legally - you just need the right processes behind them.
What Is Bait Advertising In New Zealand?
Bait advertising is generally where a business advertises goods or services at a very attractive price (the “bait”), but the business:
- doesn’t have reasonable stock available, or
- doesn’t intend to sell at that price in reasonable quantities, or
- uses the promotion to lure customers in and then pushes them toward a higher-priced alternative.
You’ll also hear people refer to a similar concept as “bait and switch”. While the terms are often used interchangeably, the “switch” part usually involves actively steering the customer away from the advertised item and toward something else (often more expensive or more profitable).
In practical terms, bait advertising is a type of misleading conduct. Even if you didn’t mean to mislead anyone, the legal risk often depends on the overall impression your advertising creates.
Common Examples Of Bait Advertising
Here are examples that can raise red flags in NZ:
- “$49 headphones – this weekend only!” but you only stocked two units, and you sell out in the first hour with no plan to meet typical demand.
- Advertising a “from $X” price when the cheapest option is essentially unavailable (for example, only available in one remote store, or never offered online).
- Listing an item as “in stock” online, taking payment, then later saying it’s unavailable and offering store credit or a pricier alternative.
- Using tiny fine print to limit the deal in ways most customers wouldn’t reasonably notice (for example, major exclusions that change the true price or availability).
- Running repeated “flash sales” where the sale item is predictably unavailable, but the sale still brings traffic to your store.
Not every out-of-stock situation is bait advertising. Stock runs out - that’s normal. The legal issue is usually whether you took reasonable steps to ensure you could supply what you advertised, and whether you were transparent about any meaningful limitations.
What Laws Apply To Bait Advertising In NZ?
In New Zealand, bait advertising is most commonly dealt with under the Fair Trading Act 1986. That Act is designed to stop businesses from misleading consumers and to promote fair competition.
In plain terms, the Fair Trading Act can apply if your advertising is likely to mislead or deceive customers - including through:
- misleading statements about price,
- misleading statements about availability,
- false or misleading representations about sales and discounts, and
- conduct that creates a misleading overall impression (even if each individual sentence is technically true).
It also often overlaps with broader issues around consumer protection and marketing ethics. If you’re reviewing your marketing approach, it can help to consider the bigger picture of unfair business practices, because bait advertising rarely happens in isolation - it’s usually part of how a promotion is framed and handled end-to-end.
Price Claims Matter More Than You Think
Bait advertising is frequently tied to price representation problems - for example, advertising a low price that customers can’t realistically access.
It’s worth getting the basics right on how you display and describe pricing, especially for “sale” language, “was/now” pricing, bundles, and add-ons. If you’re sanity-checking your pricing displays, the rules around advertised price are a good reference point for what customers should be able to understand at a glance.
What About The Consumer Guarantees Act 1993?
The Consumer Guarantees Act 1993 (CGA) doesn’t specifically define bait advertising, but it can become relevant when a promotion leads to a customer transaction and things go wrong after purchase (for example, you supply something different, or the customer wants a remedy).
That’s why your marketing team and your customer service process need to be aligned - a legally safe promotion isn’t just about the ad copy, it’s also about how you handle the customer experience once they respond to the ad.
This is the part most business owners care about: what can you do safely?
Promotions are legal. Limited-time offers are legal. Selling out is legal. But you need to avoid creating an impression that customers can reasonably rely on if you can’t deliver.
Signs Your Offer May Be Risky
Your promotion may be at higher risk of being considered bait advertising if:
- you had very low stock and didn’t disclose it (or didn’t plan inventory based on expected demand),
- you knew (or should have known) you couldn’t supply in reasonable quantities,
- your team is trained to “upsell” customers away from the advertised item, rather than help them buy it,
- you’re using “while stocks last” as a blanket cover, even where the stock level was never reasonable, or
- the advertised item is not actually available in the channels customers would reasonably expect (e.g. advertised on Instagram as if it’s available online, but it’s only in-store in one location).
Here are practical ways businesses often reduce bait advertising risk:
- Stock planning: Estimate likely demand and ensure your stock is reasonable for the scale of the advertising.
- Clear limitations: If there are meaningful limits (quantities, locations, dates, eligibility), say so clearly and upfront.
- Accurate availability info: Keep your website stock status updated and avoid taking orders you can’t fulfil.
- Rainchecks or backorders (where appropriate): If you can’t supply immediately, consider offering customers a reasonable alternative like ordering at the advertised price.
- No pressure “switch” tactics: Staff should be able to offer alternatives, but not in a way that suggests the advertised product was never genuinely available.
Put simply: your advertising should match your operational reality.
How To Avoid Bait Advertising: A Practical Compliance Checklist
If you want a clear, “do this first” approach, here’s a checklist you can build into your promo process. It’s also helpful if you’re delegating marketing tasks to staff or contractors and want consistent guardrails.
Ask: What impression does this ad create?
Avoid relying on technicalities. The key question is often whether an average customer would be misled by the overall message.
If you’re running frequent promotions, it may be worth building standard promotional wording into your Business Terms (and then tailoring each promotion as needed). This can help keep your approach consistent across your website, online store, invoices, and customer communications.
2) Make Sure Your Stock Level Matches The Scale Of The Advertising
There’s no magic number for “reasonable stock”. What’s reasonable depends on things like:
- your usual customer volume,
- how heavily you’re advertising (email list size, social reach, paid ads),
- how attractive the discount is, and
- whether you’ve run similar promos before and know typical demand.
If you’re a small business and you genuinely only have limited stock, that’s fine - just be transparent about it in a way customers will actually notice.
3) Be Careful With “While Stocks Last”, “Limited Time”, And “From $X” Claims
These phrases aren’t automatically illegal, but they can become problematic if they’re used to mask an offer that isn’t realistically available.
Good practice is to pair those phrases with meaningful detail where it matters, for example:
- “Limited to 20 units across NZ stores”
- “Available online until 11:59pm Sunday (NZT) or until sold out”
- “From $X applies to , subject to availability”
The clearer you are upfront, the less likely customers are to feel misled - and the easier it is to defend your promotion if there’s a complaint.
4) Align Your Customer Support And Refund Process
Bait advertising issues often escalate when the customer feels trapped - for example, they can’t get the advertised product and then they’re told they can only get store credit or they have to pay more.
Make sure your team knows what to do if stock runs out, including when you’ll offer a refund, a substitute, or a backorder option. Having a clear approach to Returns, Refunds And Exchanges can reduce disputes and help you respond quickly (which is often half the battle).
5) Watch Out For Online Tracking And Retargeting
In 2026, promotions don’t just live on your website - they follow customers through retargeting ads, abandoned cart emails, and “recommended product” widgets.
If you’re collecting customer information (emails, device identifiers, website behaviour) as part of your marketing funnel, make sure you’re covering that clearly in your Privacy Policy. While privacy compliance is a separate issue to bait advertising, it’s part of running clean, trustworthy marketing systems.
6) Don’t Forget Email And SMS Compliance
It’s easy to focus on whether the discount is “legal” and forget the rules around how you’re sending the promotion in the first place.
If you’re promoting deals by email (or using marketing automation), keep your messaging compliant and make sure you have proper consent and unsubscribe processes. It’s worth being familiar with email marketing laws so your promo campaign doesn’t create risk on a second front.
What Happens If You Get Accused Of Bait Advertising?
If a customer believes your advertising was misleading, it can start small - a refund request, a negative review, or a complaint to customer service.
But if the behaviour is serious, repeated, or impacts many customers, it can escalate.
Customer Complaints And Disputes
Even one unhappy customer can create real costs for a small business, including:
- time spent on back-and-forth communications,
- refunds, chargebacks, or payment disputes,
- negative online reviews, and
- loss of customer trust (which is hard to rebuild).
Often, the most commercially sensible approach is to resolve the issue quickly and then fix the promotion process so it doesn’t happen again.
Commerce Commission Risk
The Commerce Commission enforces the Fair Trading Act. If advertising conduct is misleading, the Commission may investigate. Consequences can vary depending on what happened, but may include:
- warnings or compliance advice,
- enforceable undertakings,
- court action, fines, and other penalties, and
- orders that impact how you can run promotions going forward.
No one starts a business expecting their marketing campaign to turn into a legal problem - which is exactly why it’s worth building a simple pre-launch legal checklist for promotions.
Reputation And Brand Damage
Even where the legal risk is manageable, bait advertising accusations can hit where it hurts: trust.
It’s one thing for customers to miss out because a product is genuinely popular. It’s another for them to feel like they were lured in by a deal that was never really available. That perception can stick.
Key Takeaways
- Bait advertising generally involves promoting an attractive offer that you can’t (or don’t intend to) supply in reasonable quantities, or using the offer to push customers toward a more expensive alternative.
- In New Zealand, bait advertising issues are commonly dealt with under the Fair Trading Act 1986, especially rules against misleading or deceptive conduct and misleading price/availability representations.
- Selling out isn’t automatically illegal - the risk is higher when your stock levels were not reasonable for the scale of the promotion, or when you weren’t clear about meaningful limitations.
- To reduce risk, build a repeatable promo process: review ad wording, plan inventory, disclose limitations clearly, and train staff not to “switch” customers away from the advertised item.
- Strong customer handling helps prevent escalation - align promotions with your approach to refunds, substitutions, and backorders.
- Modern marketing campaigns can create “extra” compliance issues too, so don’t forget privacy and consent rules if you’re using tracking, email, or automation.
If you’d like help reviewing a promotion, updating your customer terms, or getting your advertising compliance sorted, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
