Lawsuit claims gift card fraud is the gift that keeps on giving, to Google – Source: go.theregister.com

Google has been accused of profiting from gift card scams.

A class action complaint [PDF], filed Tuesday in federal court for the District of Northern California, claims that “Over nearly a decade, Google has knowingly kept millions of dollars in stolen money from victims of gift card scams who purchased Google Play gift cards.”

Filed on behalf of Indiana resident Judy May, the suit alleges Google keeps funds from stolen Google Play gift cards – either by taking its 15–30 percent commission from payments to Google Play app developers made with fraudulently obtained gift cards, or by withholding all funds paid via scammed gift cards for its own benefit.

Other major gift card sellers have faced similar lawsuits. In January, Apple agreed to settle a claim that it had knowingly allowed scammers to abuse its iTunes gift cards while keeping fees arising from the fraud.

In 2015, Google was sued for allegedly refusing to redeem Google Play gift cards once the balance dropped below $10. That case appears to have been settled [PDF] by mutual agreement the following year.

This latest complaint against Google cites Federal Trade Commission data indicating that gift card fraud losses amounted to $433.5 million in the period from January 2018 through September 2021. And it’s claimed that 20 percent of gift card scams involve Google Play – the ad giant’s online store for Android apps and digital content.

Google has a support page specifically addressing Google Play gift card scams, which states that gift cards are “non-refundable, unless required by law.” The specific legal scenarios where refunds may be granted are not spelled out – but advice from Community Product Experts on the same page insists: “If you gave the codes to the scammers, those cards will already be drained and the proceeds laundered beyond recovery.”

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The legal filing argues that Google, through its website and gift card language, suggests “that cards will not be refunded, reloaded, or replaced, and that the only thing Google will do if a victim contacts them is investigate the scam and potentially prevent future scams.”

Gift card scams have been a matter of concern to the US Federal Trade Commission (FTC) since at least 2018. They usually see a scammer convince a victim to provide a Google Play gift card code to make a payment for some good or service outside the Google Play Store. A common strategy is contacting a victim and claiming to be a government official advising of a tax debt that can be paid with a gift card.

Armed with a one-time use code that unlocks the value stored in a gift card, the scammer may purchase in-app digital goods with the funds and resell them on a third-party market or sell the unredeemed code gift card code to a third party. Either way, Google collects a commission whenever a gift card is used to buy apps or in-app purchases on its Google Play digital bazaar.

The complaint argues Google has not adequately warned consumers of the risk of gift card scams and discourages victims from seeking to recover stolen funds. And it alleges that Google, once alerted that a gift card code has been stolen, has all the information it needs to restore lost funds – yet fails to do so.

“Google’s attempt to disclaim liability for its knowing participation in and profiting from gift card scams is unconscionable,” the complaint argues.

Google did not respond to a request for comment. ®