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Apple Faces Class-Action Claiming it ‘Perpetuates’ iTunes Gift Card Scams

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Apple is being sued for allegedly refusing to come to the aid of victims of iTunes gift card scams.

According to 9to5Mac, Apple is facing a proposed class action accusing the company of enabling a scam that cheats consumers out of money by fraudulently inducing them to purchase iTunes gift cards. Instead of combatting iTunes gift card fraud, Apple is “knowing[ly] or reckless[ly] enabling” and profiting from it, according to the lawsuit filed against the company in the Northern California District Court.

Scammers trick victims into paying them large sums of money via iTunes gift cards by insisting they make payments over the phone for things such as taxes, hospital bills, bail money, debt collection, and utility bills, explains the report.

The lawsuit claims Apple tells scam victims that it has no way to recover gift card funds once the money has been spent, but argues that this is not true.

Apple actually holds 100 percent 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 percent of the card value. Plus, Apple also takes a 30 percent of all App Store app sales, so it would always have the ability to refund at least that much, even if the scammer has already been paid.

The company in its support documentation says, “Once [card] numbers are provided to the scammers, the funds on the card will likely be spent before you are able to contact Apple or law enforcement.” Terms and conditions outlined by the company attempt to limit its liability when cards are lost or stolen. Today’s suit in part challenges those claims.

“Even if that limitation of liability applied by its terms – which it arguably does not – Apple cannot disclaim liability for loss or damage resulting from scams which it intentionally aids, abets, and perpetuates,” the filing reads. “Any attempt by Apple to disclaim liability for loss or damage resulting from iTunes gift card scams would be unconscionable and unenforceable in light of its role in those scams and the profit that it makes and retains from such scams.”

Plaintiffs claim violation of the California Consumers Legal Remedies Act, violation of the California Unfair Competition Law, violation of the California False Advertising Law, breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, aiding and abetting intentional torts, violation of the California Elder Abuse Law, violation of the Elder Abuse Laws of Other States, and violation of the Oregon Elder Persons and Persons with Disability Abuse Prevention Act.

It’s worth noting this iTunes card scam isn’t isolated to just the United States. There have been numerous scams of the same nature in Canada related to the CRA, where Canadians have lost amounts in the tens of thousands of dollars over the past few years.

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