Federal Judge Dismisses Lawsuit Against Google Over Alleged Profits from Gift Card Scams
A federal judge has dismissed a proposed class action lawsuit that accused Google of unlawfully profiting from gift card scams on its Google Play platform. The lawsuit claimed that Google withheld millions of dollars from victims by not issuing refunds for stolen funds.
In a decision made late Monday, U.S. District Judge Beth Labson Freeman, presiding in San Jose, California, ruled that Google could not be held responsible for the financial losses incurred by the complainant, Judy May.
Freeman stated that May, who lost $1,000 in 2021, had been deceived by scammers into purchasing Google Play gift cards. She noted that May failed to demonstrate that Google either caused her losses or was aware that the funds it received were linked to fraudulent activity.
Judy May, a resident of Brownsville, Indiana, was reportedly contacted by an individual posing as a relative. This scammer instructed her to get in touch with a supposed government agent, who falsely claimed she was eligible for federal grant money. However, to qualify, she was told she needed to buy Google Play gift cards to cover upfront costs.
According to the lawsuit, May bought the gift cards and shared the codes printed on the back with the scammers, who quickly used them for purchases. This scheme is one of many that trick consumers into purchasing gift cards under false pretenses.
In her lawsuit, May argued that Google should be held accountable for the commissions it collected on the fraudulent purchases made with the stolen gift cards. According to court records, Google typically retains a commission of 15% to 30% on Google Play purchases. However, Judge Freeman ruled that Google’s receipt of these commissions was unrelated to the initial scam and thus did not make the company liable for the scam itself.
May’s complaint also suggested that Google could have prevented such scams by providing clearer warnings about gift card fraud. She argued that the gift card packaging should have alerted consumers to potential scams, cautioning that any request for payment via gift card is likely fraudulent.
READ ALSO: U.S. Election: Former Indian Envoy Predicts Indian Americans Will Back Harris
Despite these claims, the judge dismissed the lawsuit’s primary demands but left open the possibility for May to amend and refile her case. However, Freeman permanently dismissed May’s claim for triple damages, closing the door on this specific claim.
Neither Google nor May’s legal representatives responded immediately to requests for comment. However, Google, a subsidiary of Alphabet Inc., has previously faced scrutiny over its role in managing gift card transactions amid rising gift card fraud.
Gift card scams have become a growing problem across the United States. According to the Federal Trade Commission (FTC), Americans lost approximately $217 million to gift card and reload card fraud in 2023 alone. This figure likely underestimates the scope of the problem, as it includes only reported cases.
Data from 2021 also indicated that Google Play gift cards accounted for around 20% of all reported gift card scams, highlighting the platform’s vulnerability to exploitation by fraudsters.
The case, officially titled May v. Google LLC et al, was filed in the U.S. District Court, Northern District of California (Case No. 24-01314). Its dismissal underscores the difficulty of holding tech companies accountable for third-party fraud that occurs through their platforms. Judge Freeman’s ruling suggests that unless companies are directly responsible or aware of the fraud, it may be challenging for plaintiffs to claim damages in court.
In the context of this decision, companies may face calls for greater transparency and consumer protections, especially as gift card scams continue to proliferate. Consumer advocacy groups have urged companies like Google to incorporate more prominent warnings on gift card packaging and in online platforms to better inform users about the risks of fraud.
Given that many consumers rely on gift cards as a convenient form of digital currency, these platforms could implement additional safeguards to prevent misuse.
For consumers, this case serves as a reminder of the importance of vigilance when it comes to gift card purchases. Gift card scams typically involve fraudsters impersonating relatives, government agencies, or legitimate businesses and requesting payment through gift cards, as was the case with Judy May.
READ ALSO: Canada Set to Reveal Proposed Emissions Cap for Oil and Gas Sector
The FTC advises consumers to be wary of any unsolicited requests for gift card payments, as legitimate organizations will never demand payment through this method.
The prevalence of these scams suggests a need for both public awareness and potential regulatory action to protect consumers from financial losses. As gift cards continue to be targeted by scammers, companies like Google may face additional scrutiny regarding their role in managing and regulating gift card transactions.
For now, Google’s liability in this area remains limited, but the outcome of any future legal action could shape how companies address consumer protection concerns in the evolving digital economy.