Apple Cracks Down on Gift Card Fraud

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It all seems innocent enough: Someone received an iTunes gift card for their birthday, but they don't have an iPod, so they're selling it on eBay. And to encourage you to snap it up, they're offering the gift card at a price that's $10 or $20 less than its face value. Sounds like too good a deal to pass up, right? Unfortunately, there's a strong possibility that the gift card was bought with a stolen credit card or was hacked (see "Hacked: $200 iTunes Gift Card for Only $2.60"). For a while, people appeared to be using such gift cards without repercussion. But more recently, Apple seems to be quietly mounting a campaign against fraudulent iTunes gift card offenders.

A few rumors began popping up on forums and blogs across the Web about people whose iTunes accounts were permanently disabled after they purchased content with gift cards bought on eBay. When your account is disabled, you permanently lose access to all of the iTunes Store purchases on your computer (unless you back up your library or keep everything on your iPod/iPhone). One guy reported that he had lost his en­­tire library of iTunes Store content, worth over $5000, after he used multiple $50 iTunes gift cards he bought on eBay.

My quick search for iTunes gift cards yielded 155 results on eBay. "iTUNES GIFTCARD $25!!!! GREAT DEAL" read one listing, which put a $20 price tag on a card with a face value of $25. Another listing advertised a $50 gift card for $40. The deals aren't unbelievably great, but I suppose that the savings would add up if you bought gift cards frequently enough.

So what's the official word on this situation from Apple? I couldn't find any an­­swers in the iTunes Gift Card FAQ or from Apple's customer support, so I consulted Jason Roth, Apple's media contact for iTunes. Roth told me that Apple works hard to combat fraud and that the company's policy is clearly outlined in the iTunes terms of service. After some digging, I found this statement: "Apple re­­serves the right to close customer ac­­counts and request alternative forms of payment if a Gift Certificate, iTunes Card, Content Code or Allowance is fraudulently obtained or used on the iTunes Store."

Roth also said that Apple support gives customers who use fraudulent cards plenty of warning that their ac­­counts may be deactivated so that they'll have a chance to back up their content. If your account is closed, you can appeal to Apple to have it reopened, but the chances of that tactic working are pretty slim.

Undoubtedly some sellers are innocently offering legitimate gift cards on eBay, but buying any sort of gift card--iTunes or not--on eBay is still risky. If the temptation is too strong to resist, check the seller's account history, read their reviews, and contact them directly about the card. Ask them where they are located, where they got the card, and whether they can send you the physical card directly. If they're located outside of the United States but selling a U.S. gift card, the likelihood that the card is hacked or stolen goes up. And if they will only e-mail you the card's code--not the card itself--you risk buying a code that multiple people have already received.

The most important thing to look out for, though, is whether the seller lists multiple cards with discounts over $10. The more such cards a seller has, the likelier they are to be fraudulent.

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