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Consumers Beware: New Scam Targets Apple iTunes Gift Cards

By Daniel B. Kline - May 25, 2016 at 11:18AM

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The Federal Trade Commission is warning people to avoid an increasingly common con.

As a general rule, the American public needs to understand that the Internal Revenue Service and other government agencies only accept cash, checks, and credit cards.

That has not stopped scammers from saying they represent various Federal agencies, including the IRS, and tricking people into paying made-up bills using Apple (NASDAQ: AAPL) iTunes gift cards. It sounds far-fetched, but criminals using this scheme and similar variants have tricked people out of thousands of dollars.

iTunes gift cards can be purchased online and in supermarkets as well as other stores. Image source: author.

The problem has become widespread enough that the Federal Trade Commission has issued a warning on the scam, while Apple has posted a notice on its gift card page directing consumers to the federal agency:

iTunes Gift Cards are solely for the purchase of goods and services on the iTunes Store and App Store. Should you receive a request for payment using iTunes Gift Cards outside of iTunes and the App Store please report it at ftc.gov/complaint.

(Note: The correct link for filing FTC complaints is https://www.ftccomplaintassistant.gov/.)

It's a growing scam that capitalizes on the fact that once an iTunes gift card has been drained, it's very difficult for law enforcement to track the funds. In addition, because there are numerous websites where people can sell unused gift cards -- iTunes cards included -- for pennies on the dollar, criminals have an easy way to cash out their stolen funds.

What is the FTC saying?

The federal agency wrote on its blog that the scammers use a variety of methods to convince people to buy and turn over iTunes cards. They might pretend to be an IRS agent saying you will be arrested if you don't pay back taxes immediately, or they could pose as a relative or online love interest who needs help immediately.

"As soon as you put money on a card and share the code with them, the money's gone for good," wrote the FTC. "If you're not shopping at the iTunes store, you shouldn't be paying with an iTunes gift card."

The scam is not limited to Apple iTunes cards. Scammers may also ask for Amazon gift cards, PayPal transactions, or reloadable debit cards. They can also ask victims to wire money through services including Western Union or MoneyGram.

How can you protect yourself?

While it's easy to think you're too smart to fall for this or any other scam, criminals have gotten very clever. Posing as someone you know or threatening IRS action can make even sensible folks make less-than-smart choices.

But the important thing to remember is that federal agencies do not ask for money over the phone. They also would never require you to pay in the form of Apple iTunes cards, PayPal transactions, or anything other than cash, check, or credit card.

In addition to being financially damaging to the victims, these scams are a nuisance for companies like Apple, which have to deal with irate customers who have been conned. Apple does not want to have to tell a consumer that he or she was scammed and that the company cannot offer a refund. It's a difficult situation for all involved, but it can easily be avoided by consumers who stay vigilant, follow the FTC's advice, and remember that if you're not shopping on iTunes, you should not pay with an iTunes gift card.

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