Apple has agreed to settle a lawsuit accusing the company of knowingly allowing scammers to exploit its gift cards and keeping stolen funds for itself. The settlement terms were agreed upon by Apple and the plaintiffs, and a formal settlement is being drafted for presentation to U.S. District Judge Edward Davila for preliminary approval.
The lawsuit focused on a scam involving fraudsters who would pressure victims over the phone to purchase App Store, iTunes, or Apple Store gift cards to pay for various expenses like taxes, bills, bail, or debt collection. Despite warnings on the cards not to share codes with strangers, victims were tricked into revealing the codes.
Also Read: Apple Stocks Drop After Barclays Downgrade
According to the complaint, Apple would typically deposit only 70% of the stolen funds into fraudsters’ bank accounts, keeping 30% as a “commission” for knowingly converting stolen codes into dollars. The lawsuit claimed that victims likely lost “hundreds of millions of dollars” in the scam.
The settlement covers individuals in the United States who, from 2015 through July 31, 2020, bought gift cards redeemable on iTunes or the App Store, provided codes to fraudsters, and did not receive refunds from Apple.
In June 2022, Judge Davila rejected Apple’s attempt to dismiss the lawsuit, stating that the plaintiffs adequately alleged that Apple’s efforts to disclaim liability, even after victims claimed they were scammed, were unconscionable.
The case is Barrett et al v Apple Inc et al, US District Court, Northern District of California, No. 20-04812.
