$1 Billion Scam Brings an Apple Lawsuit for iTunes Gift Cards

Apple iTunes Gift Cards Lawsuit

Scams involving people impersonating IRS agents are pretty common. But one of these scams involves tricking people into buying iTunes gift cards in order to avoid arrests or having to appear in court. It does sound like a far fetched attempt at scamming people, but apparently it has been hugely successful for many years now. Fraudsters have walked away with a total of about $1 billion in iTunes gift cards and now Apple is facing a lawsuit claiming the tech giant knows about the scam but turns a blind eye because it takes a 30% cut of the sales.

The iTunes Gift Card Scam

Scammers claim to be agents for the Internal Revenue Service (IRS). They look for people who might have outstanding hospital bills or other types of debt, or just make up other reasons why the victims could owe money. They request that the victims make a quick payment to avoid arrest or taken to court.

Payment is requested in the form of iTunes gift cards. Victim told to purchase these gift cards and then send the gift card numbers to a specific phone number. Scammers then either sell the gift cards or use them to make purchases on apps they own in order to cash them out.

The scam has been going on for years and Apple has this dedicated page about it.

Apple Gift Card Lawsuit

Now seven customers have now taken Apple to court, filing a class action complaint, alleging Apple knowingly or recklessly enabled the scam described above.The complaint says Apple allows the scams to continue because the company allegedly keeps a 30% commission on the proceeds. That would put the profit at $300 million so far for Apple, based on the $1 billion total in scammed gift cards.

The plaintiffs say in addition to keeping the commission, Apple retains iTunes gift card funds for four to six weeks before paying vendors, but then falsely tells the public the scammed money is “irretrievable.” The lawsuit claims that Apple should be able to catch the scams at various points, according to Apple Insider, because the company has the ability to track all the key points in the process, from point of sale to Apple ID upload to payment.

The nationwide Class would include everyone in the U.S. who “purchased one or more iTunes gift cards, provided the redemption codes to people unknown to them who sought the codes under false pretenses, and were not refunded the value of the iTunes gift cards by Apple” during the Class Period of Jan. 1, 2015, to present.

The complaint alleges Apple has violated the California Consumers Legal Remedies Act, California Unfair Competition Law, California False Advertising Law and Oregon Elder Persons and Persons with Disability Abuse Prevention Act, as well as California and other states’ elder abuse laws.

Guru’s Wrap-up

If you receive a call from IRS or other government agencies that tell you to urgently purchase iTunes Gift Cards or Apple Store Gift Cards in order to avoid jail, don’t do it. Do nto share gift card codes or numbers with people you do not know. Gift cards are usually as good as cash. If you think you are the target of a scam, you should immediately report it to your local police department as well as the Federal Trade Commission (FTC) at ftccomplaintassistant.gov.

The Apple site also adds that if you believe you’re the victim of a scam involving App Store & iTunes Gift Cards or Apple Store Gift Cards, you can call Apple at 800-275-2273 (U.S.) and say “gift cards” when prompted.

HT: Top Class Actions

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One thought on “$1 Billion Scam Brings an Apple Lawsuit for iTunes Gift Cards

  1. Pingback: Class Action Claims Apple Is Behind $1 Billion iTunes Gift Card Scam - View from the Wing

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