Judge finds Apple may have benefited from gift card theft scheme

Apple will have to face claims the company profited off of criminal enterprise schemes featuring stolen gift cards after a federal judge declined to dismiss claims the company benefitted monetarily from sophisticated schemes that employ fake apps to swindle consumers. To get more news about 抖音充值, you can visit nnxwheels.com official website.

U.S. District Judge Edward Davila dismissed some of the claims from a class of plaintiffs that said Apple aided in the fraudulent schemes, but he did say plaintiffs plausibly alleged the company did receive some of the proceeds from the fraud and failed to appropriately reimburse the victims.

“Apple stands to benefit from proliferation of the scam, that Apple is fully capable of determining which accounts redeemed the stolen gift card funds and preventing payout of those funds and that Apple nevertheless informed Martin, Marinbach, Qiu, and Hagene that there was nothing it could do for them despite those plaintiffs’ prompt notification of the theft,” Davila wrote in the 28-page decision.

The ruling is a big win for plaintiffs who can now proceed to the discovery phase, despite having the bulk of their fraud claims against the large Silicon Valley company thrown out.

Gift card scams are an increasing problem, an issue that is not in dispute in the present case. The Federal Trade Commission estimates criminals stole $30 million through gift card scams in 2020 alone. The previous year, it was an estimated $24 million.

Scammers typically target an individual and then give an urgent reason they need to turn over sums of money, to rescue a relative, stave off collections or even secure a place in line to get the Covid-19 vaccine.

They encourage the person to purchase gift cards and then provide the unique codes on the back of the card. The scammer gains access to the funds and either sells it to a third party or spends the money in an application that the scammer owns or has a financial stake in.

In the case of Apple, the scam typically centers on I-Tunes gift cards, or gift cards for the Apple App store. These account for about a quarter of all reported gift card thefts in the United States.

One of the more sophisticated grifts involves people who build their own apps within the Apple Store and then use gift cards to purchase items or services with an app that they control. In that case, by using other people’s gift cards to buy for services within their own apps, they are effectively transferring the stolen cards into money they can then possess. In these instances, Apple benefits, the plaintiffs say, because they get 30% of the cut from hosting the app, which means they are, in effect, materially benefitting from the scheme.

Plaintiffs say Apple should have access to stolen gift card codes, particularly when they are alerted to the theft promptly and should be able to prevent the purchases from going through or deactivate suspicious app accounts. They also say their stolen cards should be reimbursed.

Davila said Apple’s arguments that it could solely rely on its stated refund policy, which the customers tacitly agreed to on purchase, is insufficient.

“The court finds that Martin, Marinbach, Qiu, and Hagene have alleged facts from which it may be inferred that by refusing to refund the scammed funds, Apple prevented them from taking possession of their property and, indeed, benefitted from perpetuation of the scam,” Davila wrote.

The ruling merely means the plaintiffs cleared the all-important motion to dismiss phase of the trial and can proceed to discovery and other aspects of document production. It is not a finding of guilt on behalf of Apple.