Law Street Media

Apple Asks Court to Toss Consumer Gift Card Scam Suit

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Cyber Attack

Apple Inc. and Apple Value Services, LLC (collectively Apple) have moved to dismiss a lawsuit claiming that they should have done more to protect consumers from Apple gift card scams. The motion to dismiss, filed Oct. 8 in the Northern District of California, contends that the plaintiff and putative class cannot hold Apple accountable for the criminal conduct of third-party scammers and that Apple validly disclaimed liability from such acts.

According to Apple’s motion, the plaintiffs are seven individuals between the ages of 50 and 71 who allegedly received “a call instilling panic and urgency to make a payment by purchasing App Store & iTunes Gift Cards or Apple Store Gift Cards from the nearest retailer.” Thereafter, the victims were asked to share the redemption code on the back of the card, beneath the sealed packaging and covered by a layer of foil.

Apple notes that the gift cards reportedly warn consumers in bold, red font, to “not share your card with anyone you do not know.” Apple gift cards’ terms and conditions also reportedly state that “neither the issuer nor Apple is responsible for any loss or damage resulting from lost or stolen gift cards or for use without permission.”

After the victim shared the code, the scammer would reportedly re-sell the gift card’s value or load it onto their own Apple ID. Scammers would sometimes spend the money on apps which they controlled to recoup approximately 70% of the funds expended. The complaint accused Apple of aiding and abetting the scammers, purportedly so that it could keep its portion of the funds spent on Apple content and products.

The consumers brought claims under California’s Consumers Legal Remedies Act, Unfair Competition Law, False Advertising Law, and also under several common law causes of action. The plaintiffs sought to certify a nationwide class of “consumers who ‘provided the redemption codes to people unknown to them who sought to the codes under false pretenses’ and ‘were not refunded the value of the iTunes gift cards by Apple,’” a subclass consisting of people who contacted Apple for a refund but were denied, and another of scam victims over the age of 65.

Apple moved to dismiss on the grounds that the complaint neither alleged that Apple misled consumers into transferring gift card funds to scammers, nor that Apple concealed the fraud. Instead, Apple argued, it affirmatively warned consumers about such scams by posting scam information on its website and through the warning printed on the back of gift cards, though it was without legal obligation to do so. As a secondary argument, Apple claimed that it expressly and validly disclaimed liability for third-party theft of its gift cards through its terms and conditions waiver.

Accordingly, Apple asked the court to dismiss the complaint with prejudice because amendment would be futile. The motion to dismiss hearing is scheduled for Jan. 14, 2021.

The plaintiff is represented by Scott + Scott Attorneys at Law LLP and Cafferty Clobes Meriwether & Sprengel LLP. Apple Inc. and Apple Value Services, LLC are represented by Jenner & Block LLP.

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