Class action allowed to continue

Apple gift card scams are one of the most common tactics of scammers impersonating the IRS, and a judge has now ruled in favor of a group of victims who argue that Apple profits from these scams and should do more to help.

Victims of the scam have filed a class action lawsuit alleging that Apple takes advantage of fraudulently obtained cards and is able to block their use and reimburse buyers. Apple filed for dismissal, a request that has now been denied…

How Apple Gift Card Scams Work

A typical Apple Gift Card scan works like this. A victim receives a phone call from someone claiming to work for the Internal Revenue Service (IRS). They are told that there is a problem with their tax return and that unless the problem is fixed immediately, they risk being arrested. When asked how to arrange payment, victims are instructed to purchase Apple gift cards (Store or iTunes cards) and then pass the details to the caller.

This should clearly signal that this is a scam: the IRS will of course never require payment by gift card. However, some people are so freaked out that they get caught up in the scam and buy the cards.

What happens next depends on the card type. With store cards, scammers usually purchase high-value products like laptops and smartphones, which are then resold. iTunes gift card scams usually work in a slightly different way, usually used to buy paid apps owned by the scammers, so they get 70% or 85% of the money when paid by Apple.

In any case, the cards are used immediately or very quickly, at which point the victim’s money is gone.

Variations of the scam include claims that a distressed relative or friend needs urgent help, or that the victim will be taken to court for an unpaid bill.

The trial

A number of victims filed a class action lawsuit against Apple in 2020, arguing that in the case of iTunes cards in particular, the company is able to refund some or all of the money, but is refusing to do so.

The lawsuit says Apple tells scam victims there’s nothing they can do once the money has been spent, but argues that’s not true. In fact, Apple holds 100% of the funds for a period of 4 to 6 weeks, between the applications purchased and Apple paying the developer. During this time, the company is able to refund 100% of the value of the card.

Also, Apple takes a 30% commission, so still be able to repay that amount, even after the scammer has been paid […]

Many scam victims are seniors, so three of the eleven charges accuse Apple of violating laws designed to protect seniors from financial abuse.

Court decision

Apple has filed a motion to dismiss the case on a number of grounds, one of which is that gift cards are sold with a published refund policy which states that no refunds are possible after use. of a map. A judge has now dismissed that motion, allowing the case to continue.

Courthouse News reports that most of the 11 counts in the claim were rejected, including the claim that Apple helped in the scams, but two key elements remain: that Apple benefits from the scams and that the company can do more to help victims.

Apple will face allegations that the company profited from criminal enterprise schemes featuring stolen gift cars after a federal judge refused to dismiss claims that the company benefited financially from sophisticated schemes that use fake apps to defraud consumers.

U.S. District Judge Edward Davila dismissed some of the claims from a class of plaintiffs who claimed Apple aided in the fraudulent schemes, but he said the plaintiffs plausibly alleged the company received part of the money. proceeds of the fraud and failed to adequately reimburse the victims.

“Apple stands to benefit from the proliferation of the scam, that Apple is fully capable of determining which accounts redeemed the stolen gift card funds and preventing payment of those funds and that Apple nevertheless informed Martin , Marinbach, Qiu and Hagene that nothing could be done for them despite prompt notification of the theft by these plaintiffs,” Davila wrote in the 28-page decision.

The Federal Trade Commission estimates that gift card scams cost victims $30 million in 2020, and about a quarter of them involve Apple Cards. However, this estimate is based only on reported cases, so the real amount is likely much higher, as many victims are too embarrassed to admit they fell for a scam. Some have suggested that the true sum is probably around 10 times the official estimate.

The next step in the case will be discovery, where Apple will have to hand over relevant information about how it handles these scams. Information likely to be sought includes the company’s mechanisms for detecting fraudulent gift card transactions and the total amount of money it earns in commission from scams.

Photo of scam victim: NJ

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