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One of my colleagues got scammed for $14,000 by one of the Apple Gift Card scams.

He paid $4,000 in Cash for Gift Cards and bought the other $10,000 worth by maxing out a credit card.

He's gone ahead and registered a complaint with NYPD and is considering opening a dispute with the Credit Card company. My question is, does he have any grounds for opening up a dispute and what are the chances of it being resolved in his favor.

More details for context and the story as narrated by him on the lunch table today. He got a call on Friday in the afternoon from NYPDs Official Number (This was flagged as such by Truecaller) telling him that his SSN would be blocked as they suspected him or his acquaintances to be involved in human trafficking in Texas and that he would not be able to access any funds. They suggested to him to withdraw cash and to convert it to Apple Gift-Cards. He went to an Apple store in NYC (Grand Central) after withdrawing the max allowance from his bank ($4000) and bought Gift-Cards, when asked by the cashier at the store as to why he was buying gift cards of such a high denomination. He told him that it was for personal use.

He then takes the subway to WTC (Apple Store in the Oculus) and maxes out one of his credit cards, same story with the cashier. After this he gets another call from the scammers who ask him for the gift card numbers on the pretext of keeping a record of the serial numbers to help him convert them back to cash later. They advice him to use the other credit cards that he has and do the same thing. At this point he tries again at the WTC store and his Chase card gets declined for suspected fraudulent activity. The other cashier at the Apple Store advices him that this is a very common scam and alarm bells finally ring for him and to his horror the balance of all the gift cards had been drained.

He then goes to NYPD and registers a formal complaint, calls Apple who tell him that the gift cards have been used and that they can share more details with the police if they contact them officially. He also called his credit card company to ask them why they didn't decline the $10,000 transaction and how he can dispute the transaction. They advice him to contact them again in a couple of days after the transaction settles and advice him that it will take a couple of months to complete the investigation. In the meantime he doesn't need to pay the $10,000.

The specific question here is that since he went and used the card in person at the store, then lied to the associate who asked him why he was buying gift cards of such a high denomination on the instructions of the scammers; does he really have a case for disputing the transaction? Is this not similar to being responsible for transactions made by another authorized user?

I understand if his card had been skimmed and then used, that would be a clear cut case of fraud and he'd have no liability.

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    I really don't think your guy has any case to dispute the card charge. He knowingly & willingly entered into a transaction with Apple, and Apple gave him exactly what he paid for. Apple is not responsible for what he chose to do with those cards, and it's not Apple's job to parent him. – brhans Mar 20 at 12:08
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    Just for future reference. Why would the police call you for anything other than help in solving the crime ? They surely wouldn't advise anyone to commit what looks like money laundering and they will surely not help someone who (or their family) is suspected of human trafficking. Seriously people, think about the situation before making rash decisions. – xyious Mar 20 at 15:10
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    The fact that the credit card company told him not to pay the $10,000 (until the investigation is complete) is promising, but not by any means a guarantee that he's off the hook for it. – Steve-O Mar 20 at 15:37
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    @xyious no doubt the friend made a string of blunders, not least overtrusting CallerID, thinking NYPD will accept a payoff for human trafficking, not seeing a huge red flag when the government wanted Apple gift cards?? hello??? I think this "persuasive operation" is simply good at spear-phishing naïve foreigners... In my area code we get a lot of recorded messages in Chinese, I hear they are immigration scams warning someone will be deported unless they pay up in Apple cards... – Harper Mar 20 at 22:00
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    @Harper - Apple doesn't appear to want to be uninvolved, since the OP wrote "Apple who tell him ... they can share more details with the police if they contact them officially". They're certainly not going to just reverse the transactions on gift card only on this guy's say-so - since they were legitimately purchased and their serial numbers willingly given away. I don't see Apple having significantly more of a duty of care here than a bank would have if you went and drew $1000's in cash from your account... – brhans Mar 20 at 22:04
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I Work as a dispute specialist for a credit card company. I handle cases like these all the time and it's a terrible thing to have seen happen to people. We advise cardmembers to look into sources outside of their credit card company. As previous comments have mentioned, Your friend knowingly got himself into a transaction and the services have been rendered to him. Credit card companies do not have a direct line of communication w/ the scammer. Only where the purchase was made Kroger, Walmart, etc). I would reccomend having your friend reach out to his local attorneys general office and also the Gift card company to see if they have any procedures for third party scams. Rarely I see a dispute from this turn out in the card members favor. The only time is if the merchant accepts financial liability for the charge prior to arbitration. But these cases never make it to arbitration even if the merchant does not accept financial liability.

  • Thanks for your answer, you're right in this case the bank told him that he's on the hook for the charge. He's been following up with the police but it looks like the case will run cold. I'll suggest that he try arbitration as well. – nikhil Jun 29 at 23:48
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He can dispute the charges, but I don't think he has a strong case to, so I'd expect the dispute to resolved in the merchant's favor. In my view (this is subjective of course), the fraud occurred between your friend and the person he gave the gift cards to. The merchant may have some legal responsibility to guard against common scams, but I expect their liability to be pretty limited. You even say that they asked him about the high denominations, and that he lied about their purpose. I think if he had told the truth in that moment, they probably would have warned him about potential scams, but he didn't, so they're probably pretty well within their legal responsibility to warn him.

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    If I understand the story correctly, he actually didn't lie about the purpose. He said they were for "personal use" and the story says that he didn't intend the scammers to use the cards but only gave the scammers the card numbers so they could help him use the cards later. So it sounds like he did intend to use the cards himself later and thus did intend them for personal use. – David Schwartz Mar 21 at 21:13
  • @DavidSchwartz You're absolutely right, I'm not sure what he told the credit card company (i.e. if he described in detail his foolishness) Cody - Good answer, I'll post back with updates (if and when I hear back from him). – nikhil Mar 22 at 0:43
  • What's really odd is Apple can't block the gift cards for at least partial recovery. – Joshua Apr 7 at 0:40
  • The fraud occurred between the scammers and Apple when the scammers accessed someone else's gift cards without their permission. Apple processed an unauthorized transfer/access. – David Schwartz Jun 24 at 2:30
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I don't think he has much of a chance to dispute the credit card charges. He paid $10,000 for gift cards, and he received $10,000 worth of gift cards. There's nothing wrong with these cards, the merchant has delivered what he paid for, and the gift cards have been used, so he cannot return them.

For Apple, there was a scam, and they will do what they can to help police with their investigations. One of the things that the police and credit company will consider is a purchaser who bought the cards, re-sold them, then tried to issue a chargeback or claim fraud so they nearly double their money. That may not have happened here but it is an example of the kind of secondary fraud that police and credit companies will watch for. Your friend is honest (though naive) but the police and credit company don't know that and deal with bigger scammers and will ask a lot of questions to ferret out secondary frauds while helping innocent victims.

  • While the first part of your answer is perfectly fine, the last paragraph isn't. Victim bashing or worse speculating their involvement in a criminal offense is unnecessary and wrong. – nikhil Mar 22 at 21:32
  • @nikhil: The point remains that the investigators have to rule that possibility out before there is any chance of having the sales reversed. gnasher probably could have worded it a little bit better, but that the evidence so far is 100% consistent with a scam which will make Apple suspicious of the complainant is not "victim bashing". – Ben Voigt Mar 22 at 22:19
  • @nikhil It is absolutely necessary to check what really happened if either Apple or the credit card company are going to refund money (which is coming out of their pocket after all). – gnasher729 Mar 23 at 15:12
  • The gift card was used by someone not authorized to use it. The authorized user complained to the issuer immediately. This was a consumer-to-business payment. How do you get that Apple doesn't have to reverse the unauthorized access? – David Schwartz Jun 24 at 2:29
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I don't think your friend has any case at all for making a chargeback - he got exactly what he paid for. And we ALL pay for bogus chargebacks.

The more interesting point is whether or not gift card merchants have some responsibility here. The general public is rather naive about gift card scams; such scams are common but rarely discussed until someone you know has been scammed.

Gift cards are used on a particular site, either by the scammer or by a third party who buys the card at a discount. Why do these sites not demand - and verify - documentation from the customer before the card can be used? Why are the cards not covered with large warnings about how no legitimate business will take payment by a gift card?

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