Apple Lawsuit Settled Over iTunes Gift Card Scams

Apple is settling a lawsuit that accused the tech retailer of allowing fraudsters to exploit its iTunes gift cards and pocket a portion of the stolen funds. The legal dispute was centered around allegations that Apple knowingly facilitated scam activities through its gift cards, benefitting from the fraudulent transactions by retaining a hefty chunk of the stolen money.

The details of this arrangement surfaced from an official filing at a federal court in San Jose, California, where Apple and the victims who claimed they were scammed have reached an agreement. After collaborating with a mediator, both parties are currently crafting the final agreement for the judge’s initial approval.

The fraudulent scheme revolved around criminals coercing victims into buying App Store and iTunes gift cards or Apple Store gift cards under the guise of paying various bills, ranging from hospital and utility expenses to taxes, bail, and debt collection. The scammers would then convince victims to share the unique codes on the back of the cards.

The lawsuit alleged that Apple acted to convert these stolen codes into cash. Apple supposedly took the money, kept a 30% “commission” for itself, and transferred the remaining 70% to the scammer’s bank account. The victims of the scam supposedly lost hundreds of millions of dollars in total.

The lawsuit catered to those in the U.S. who, between 2015 and July 2020, purchased gift cards applicable to iTunes or the App Store, gave the codes to fraudsters, and didn’t receive a refund from Apple.

Earlier in June 2022, a bid by Apple to dismiss the lawsuit was rejected by the court. The judge ruled that the plaintiffs successfully accused Apple of denying any liability, even when victims came forward saying they were scammed — a move deemed by the judge as unconscionable.