Class Action Claims Apple Is Behind $1 Billion iTunes Gift Card Scam

Wednesday’s technology CEO Congressional hearing was driven ostensibly by the government’s anti-trust investigation. Yet most of the questions had little to do with anti-trust.

  • One Member of Congress wanted to know why Facebook hadn’t taken down a tweet. Another insisted Amazon should remove counterfeit item listings whether Amazon knows the item is counterfeit or not.

  • In one of the most socially shared bits, a Member of Congress was promoting themselves on Twitter (ironic!) questioning Facebook over why they allow Members of Congress to lie. Congress itself can’t stop the lying, but Facebook is expected to fix politics.

  • Others wanted to know ‘why do my fundraising emails go to spam?’ ‘why don’t the things I like do better in search?’ ‘why are your sites helping to elect [insert Democrats/Republicans]?’

    Somehow they all tried to help Hillary Clinton win in 2016, she didn’t win, but clearly they have too much power? (Coming from politicians who support the right of corporations to back candidates, and of course the tech companies also simultaneously favored Trump over Clinton which is why they let Russian bots do their thing.)

I thought of this farce reading up on a new lawsuit against Apple.

  • Scammers pretend to be from the IRS, and the IRS can’t do anything about it.

  • They demand iTunes gift cards

  • And Apple is at fault because they don’t stop what the government has been unable to stop.

Scammers claim to be agents for the Internal Revenue Service (IRS). They look for people who might have outstanding hospital bills or other types of debt, or just make up other reasons why the victims could owe money. They request that the victims make a quick payment to avoid arrest or taken to court.

Payment is requested in the form of iTunes gift cards. Victim told to purchase these gift cards and then send the gift card numbers to a specific phone number. Scammers then either sell the gift cards or use them to make purchases on apps they own in order to cash them out.

The theory is Apple turns a blind eye to the conduct because they make money selling the iTunes gift cards, and a lot of money is at stake. I’m not sure how that’s different than claiming the federal government turns a blind eye, because it too has an incentive to see greater demand for money (it profits from the seigniorage).

Except the theory is absurd with respect to the federal government, though so too is even $300 million in margin on gift cards for Apple which is a $1.7 trillion company. They’re going to engage in conspiracy to defraud to boost gift card sales?

Nonetheless, a class action claims Apple has violated a whole host of laws from unfair competition, to false advertising, to elder abuse. Because Tim Cook is masterminding it all, like a modern tech Keyser Soze.

Sometimes bad things happen, and the people who are supposed to catch bad people don’t. And we want to go looking for someone to blame. I find over the years I complain less and less to travel providers when bad things happen because a certain amount of things going wrong is just kind of baked it. I can self-insure against it (miles and points are great for that). And when I see someone else in my travels having a harder time with self-help, I’ll try to give them a hand.

Not everything we don’t like has a villain, and sometimes people trying their best find it’s good enough to make the world better but not to solve every problem along the way.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I’m also reminded of people who want to limit campaign contributions or the ability of corporations to donate money to political causes. Why not get to the root of the problem and prevent members of Congress from using their power to hand out favors in exchange for money? No, no, these are noble men. The corporations are the only ones to blame.

  2. Let’s face an undeniable truth.

    No matter the political party or candidate, “campaign contributions” by unions or corporations (or, more accurately, a corporation’s PAC) are nothing more than legalized bribery.

  3. Yes it’s a little bit silly. There was a similar lawsuit against walmart last year: Foster et al v. Walmart Inc et al. Just took a look and it’s still chugging along. WM filed a motion to compel arbitration which the judge denied. They then filed an interlocutory appeal. The judge stayed the case pending the appellate ruling. Fun fun.

  4. Any idiot who can afford the filing fee can file a lawsuit — even a class action. It appears from the article that this suit was filed in California state court, due to the claims alleged. Apple will quickly get this one moved to federal court (Class Action Fairness Act allows this if a nationwide or multi-suit class action is alleged). The federal courts will then dismiss it before the class is certified. Unfortunately, it will take many months for this to happen, but this is a classic example of the class action abuse in which some lawyers indulge.

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