One of the knocks against the car industry is deceptive advertising. You know, the ads in the paper that advertise a hot new car or a really nice used car for a low price. They are counting on you seeing the ad or hearing it on the radio and rushing out to pick it up while it's still available.
This is called the bait.
However, you have to really check out the fine print. From personal experience, I've noted the ads have the words, "This offer only valid on model XXXXXX , similar vehicles may or may not be available." They're counting on you showing up with buying on the mind. When you get there, it seems they've "unfortunately sold that particular vehicle,” but they just happen to have this other model that they'd love to show you. And like most people, once you've got buying on your mind, it's hard to make yourself stop and think, wait, that's not the car (or the price) I wanted. Let's come back later. They're counting on your ego not wanting to admit you made a mistake, so you wind up buying something you didn't really want or else you spend more for the same car.
This is called the switch.
Now, I'm not saying car dealers are con men. No, they're salesmen who use the concept of a loss-leader, (selling something for less than you could to draw customers in), and darn good salesmanship to make their sales quota for the month. See, there was a vehicle there for that price and if you had shown up at the right time, you could have gotten it. That's why this type of sales technique is legal.
Unfortunately, some publishers are starting to adapt this concept for their own operations.
Now, let's change the scenario a bit and we'll see if there is any correlation.
A publisher's web site talks about publishing books, giving advances, book distribution, and good royalties. Sounds good so far, so you send off your manuscript and wait. After a while, you hear back from them and they do offer you a contract. (We'll talk about whether it's a good contract or not another time.) You are ecstatic and are certain to mention this on various bulletin boards, your blog, your writer's group, etc. Of course, your book is due to come out in eighteen months to two years, but you've got a publisher who's giving you a modest advance.
This is the bait.
However, there are others who've read about this publisher and heard all these good things about them. So, they submit their manuscript and wait. After a while, you hear back from them, but unlike our first author, your manuscript was rejected. You're naturally upset to know the manuscript you slaved over for years just wasn't good enough.
However, hope is not lost. No, your manuscript is not "quite" good enough for this publisher, but they happen to have a sister imprint (know of another company, etc.) that would be happy to publish your book for you as long as you're willing to buy X number of copies from them up front. But, it's your book and you have to believe in your book. Besides, all you have to do is sell (X-Y) copies to break even and then everything else is gravy.
This, my friend, is the switch.
Publishers like this are counting on you being caught up in the "I want to be published" emotion and instead of rejecting you outright, they're offering you an out. It's like being at the car dealership. You're there, you might as well buy something, right? They're saying, "Hey, we've already developed a relationship here, why not let us publish that for you (for a small fee/guarantee book purchase, etc.)?” It's not technically wrong . . . they're stating up front that you're going to have to spend money to get your books . . . but they're preying on your state of mind and hoping you'll make that jump.
So, it's not illegal, but it's definitely taking advantage of people. Bait-and-switch publishers are trying to have their cake and eat it too: by requiring writers to buy their own books, they turn authors into customers--yet, because they aren't charging for printing and binding, they are able to claim they aren't vanity publishers. The bottom line, though, is still that you're paying to see your work in print.