Federal judge rules Google not responsible for refunding gift card scam victims

Google receives 15% to 30% commissions on gift card purchases

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What just happened? Gift card scams are a popular tactic used by scammers, who trick people into buying the cards and providing the codes they contain so the criminals can access the money without a trace. Companies such as Google make a commission on these gift card purchases, and according to a lawsuit outcome, they have no obligation to refund victims.

The story starts in April 2021 when Brownsville, Indiana resident Judy May fell victim to a scammer posing as a relative who told her she was eligible for federal grant money if she bought Google Play gift cards.

May was told she needed to send codes from the back of the gift cards to cover certain costs upfront to receive same-day delivery of the grant money. She says she lost $1,000 because of the scam – money Google refused to refund.

May launched a proposed class-action lawsuit against Google that accused the firm of illegally profiting from the scams by refusing to refund victims. The suit also claimed that Google engaged in a range of unfair practices and should place warnings on its gift cards informing buyers of potential scams.

US District Judge Beth Labson Freeman dismissed the suit this week. The judge said that it was the scammers, not Google, who persuaded May to buy the cards, adding that the plaintiff had failed to show that Google knew it was receiving stolen funds or caused the losses.

Google receives 15% to 30% commissions on gift card purchases. Judge Freeman said the tech giant was not liable for keeping the money as Google's conduct was unrelated to the original fraud.

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Freeman also said Google did not engage in unfair practices and agreed with the company's view that the funds were not considered stolen when May purchased the cards.

May also failed to prove that Google deployed technology to detect scams when her purchases were made.

Freeman ruled that "May suffered economic harm because of third-party scammers' fraudulent inducement, not Google's omission or misrepresentation."

Freeman said May could try to refile an amended lawsuit within the next 45 days, but dismissed a claim seeking triple damages as the complaint "failed to show a likelihood that May will be a victim of gift card scams again given her awareness of such scams."

According to the FTC, Americans lost $217 million in gift card or reload card fraud last year, and that only includes the cases that were reported, meaning the actual amount is likely much higher. May said Google Play cards account for 20% of gift card scams.