Class action lawsuit accuses Apple of benefitting from iTunes gift card scams

Photo: Apple

Apple faces a class action lawsuit from customers who have fallen victim to an iTunes gift card scam that they claim Apple has benefited from.

The scam has been around for a number of years. It frequently involves people being phoned up and asked for money by the “Inland Revenue Service” or another department who ask them to pay money owed by buying iTunes vouchers and then handing over the authorization code.

While that might sound like the kind of scam that many would see through, there are nonetheless folks that have been effectively targeted by scammers working in this way. And it turns out that it’s pretty big business.

Why is Apple being blamed for iTunes scams?

So why is this Apple’s fault? According to a report by Patently Apple, it’s because Apple “falsely tells victims that 100% of their money lost in the scam is irretrievable and this isn’t true. Further, the lawsuit claims that Apple has retained hundreds of millions of dollars in commissions in this scam that should be paid back to those who were victims in this highly sophisticated iTunes Gift Card Scam.”

In essence, the people making the complaint suggest Apple is incentivized to let the scam continue. That’s due to it receiving a 30% commission, which it could pay back if it wanted. This is because iTunes gift cards are often used to buy paid apps. Since Apple takes a cut of apps sold through the App Store, it therefore profits from a scam. The complaint also suggests that Apple holds onto funds for 4-6 weeks between payments being made and it paying the developer. During this time, Apple could theoretically pay all of the money back.

The report notes that:

“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.”

Apple maintains a webpage warning about iTunes gift card scams. However, the lawsuit says that it doesn’t go beyond this. The suit was filed in the U.S. District Court for the Northern District of California.