From Nasdaq:

Apple has agreed to settle a lawsuit accusing the company of allowing scammers to exploit its gift cards. The settlement terms have been agreed upon, and a formal settlement is being drafted to be presented to U.S. District Judge Edward Davila for preliminary approval. The scam has resulted in victims losing “hundreds of millions of dollars”.

The scam involves fraudsters instilling panic or urgency by insisting that victims buy gift cards in order to pay for taxes, bills, bail, and debt collection. Victims are then told to share the codes on the backs of the cards, despite a warning against doing so. Apple would typically deposit only 70% of the stolen funds into fraudsters’ bank accounts, keeping the remaining 30% for itself as a “commission”.

The lawsuit covered anyone in the U.S. 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. After victims claimed they were scammed, Apple’s effort to disclaim liability was deemed unconscionable by U.S. District Judge Edward Davila.

The case, Barrett et al v Apple Inc et al, is in the U.S. District Court, Northern District of California, with case number 20-04812. Apple is working on a formal settlement to be presented to the court for preliminary approval. Apple and lawyers for the plaintiffs declined to comment, but the tools required in such a case are on the line, making this case important to watch.



Read more: Apple agrees to settle lawsuit over iTunes gift card scam