Apple settles lawsuit accused of allowing scammers to exploit gift cards, keeping stolen funds; agreement pending court approval. (Reuters)
Apple has reached an agreement to settle a lawsuit that accused the tech giant of enabling scammers to take advantage of its gift card system, pocketing stolen funds in the process.
In a recent filing in a federal court in San Jose, California, it was disclosed that Apple and the plaintiffs have reached a significant settlement after collaborating with a mediator. The terms of this settlement are being formulated into a formal agreement, which will be presented to US District Judge Edward Davila for preliminary approval.
Requests for comments from Apple and the plaintiffs' legal representatives went unanswered at the time of reporting.
The lawsuit revolves around a scam where fraudsters manipulate individuals into purchasing App Store, iTunes, or Apple Store gift cards under false pretenses, such as urgent payments for taxes, medical bills, utilities, bail, or debt collection. Subsequently, victims are coerced into sharing the codes on the back of these cards, disregarding the explicit warning against sharing these codes with unknown individuals.
According to the complaint, Apple would typically transfer only 70 percent of the stolen funds to the fraudsters' bank accounts, retaining the remaining 30 percent as a "commission" for knowingly converting stolen codes into monetary value.
The complaint estimated that victims collectively lost "hundreds of millions of dollars" due to this scam.
The lawsuit aimed to include anyone in the United States who purchased gift cards redeemable on iTunes or the App Store between 2015 and July 31, 2020, shared the codes with fraudsters, and did not receive reimbursements from Apple.
Judge Edward Davila declined Apple's attempt to dismiss the lawsuit in June 2022, asserting that the plaintiffs adequately demonstrated that Apple's disavowal of liability, despite victims reporting being scammed, was morally objectionable.
This legal case is identified as Barrett et al v Apple Inc et al, filed in the U.S. District Court, Northern District of California, with the case number 20-04812.
