Apple is being sued for allegedly refusing to help those who have fallen victim to a iTunes gift card scam. An 11-count class action lawsuit has been filed against the company.
Apple is accused of lying when it says that there is no way to trace or refund the value of the cards …
There are a large number of scams which involve pre-paid gift cards like store cards and iTunes gift cards. Here’s how the FTC describes them.
Anyone who demands payment by gift card is always a scammer.
Many different kinds of imposters ask you to pay with gift cards. Someone might call you and claim to be from the IRS, collecting back taxes or fines. The caller might say he’s from tech support, asking for money to fix your computer. The caller might even say she’s a family member with an emergency and needs money right now.
But they all have in common an urgent need for you to send money right away […] Once you buy the card, the caller then will demand the gift card number and PIN on the back of the card. Those numbers let them immediately get the money you loaded onto the card. And once they’ve done that, the scammers and your money are gone, usually without a trace.
With store cards, the scammers usually buy high-value products like laptops and smartphones, which are then sold. iTunes gift card scams usually work in a slightly different way, typically being used to buy paid apps owned by the scammers, so they receive 70% of the money when paid by Apple.
The lawsuit says that Apple tells scam victims there is nothing that can be done once the money has been spent, but argues that this isn’t true. In fact, Apple holds 100% of the funds for a period of 4-6 weeks, between the apps being purchased and Apple paying the developer. During this time, the company is in a position to refund 100% of the card value.
Additionally, Apple takes a 30% commission, so would always be in a position to refund this much, even after the scammer has been paid.
As Patently Apple notes, iTunes gift card scams are big business.
The overwhelming majority of victims do not report the scam to the Federal Trade Commission (“FTC”). Yet even the limited iTunes gift card scams reported to the FTC during 2015-2019 exceed $93.5 million, with the dollar amounts increasing significantly each year. These publicly reported dollar amounts include the losses of only the subset of victims who fill out a detailed online FTC form asking for their personal information. As a result, this $93.5 million figure appears to be only the tip of the iceberg.
Even if only 10% of scam victims report to the FTC (versus local police, attorney general offices, Apple, or nobody at all), the iTunes gift card scam would approach $1 billion, with Apple retaining $300 million in commissions.
Many scam victims are elders, so three of the eleven counts accuse Apple of being in violation of laws designed to protect elderly people from financial abuse.
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