How to Avoid Buying a Fraudulent iTunes Gift Card on eBay

November 5, 2009 | Add a comment

It sounds fairly innocent. Grandma gives her grandson an iTunes gift card for Christmas but he doesn't have an iPod, so he re-sells it on eBay. Being a sweet young thing (or just stupid), he's selling the gift card for $10 off its face value.

It's difficult to pass up such a deals when we seem them, but it turns out iTunes gift cards are one of the most heavily stolen gift cards sold on eBay, and this is the most commonly used come on. Reports indicate many iTunes gift cards sold on eBay in bulk were bought with a stolen credit card and are being sold through hacked eBay accounts.

iTunes apparently doesn't think these sales are as harmless as it appears at first blush and is cracking down not on the sellers but on those who use fraudulent gift cards. Here's everything you need to know to avoid getting caught up in this iTunes gift card scam:

Check the country of origin.
Many of these offers claim to originate in China, but Apple doesn't sell U.S. iTunes gift cards in any other country because of content-licensing restrictions. An iTunes gift card must be purchased either in a U.S. retail store or, if purchased online, the buyer must use a U.S. credit card or PayPal account. Make sure eBay verifies the address with which you registered. A scammer can register for a U.S. account from anywhere in the world but a PayPal account will verify the country of origin.

Why would a seller take a loss?
The U.S. iTunes wholesale price is $0.70 per song, so sellers of gift card priced at less than 70-percent face value are losing money, particularly when you consider eBay and PayPal fees take another 5 to 10 percent bite out of the profit. No doubt some people actually DO receive iTunes gift cards as unwanted gifts and try to sell them on eBay, but it's unlikely a seller based outside the U.S. received 10 cards at a whack for his birthday.

Positive feedback isn't an indicator.
Purchasing from an eBay seller with positive feedback isn't necessarily a fail safe. It can take a credit-card owner several days to realize his card has been stolen and report it. In the meantime, other gift card buys may have left positive feedback for the fraudulent eBay seller. A seller also can build a strong feedback history by having other fraudulent sellers buy $0.01 items and register positive feedback. This is a very quick and inexpensive way for them to build up credibility. In some instances, the buyer and seller are the same person.

Get the physical card.
Fraudulent sellers will simply email you the gift card code to enter at the iTunes store. This speeds up the process before the con can be discovered. Make sure the seller mails you the actual card.

The risk is high.
Once a theft or hack is discovered, one of two things can happen: Apple will cancel codes for an unredeemed card or, if a card has already been redeemed, Apple can suspend your iTunes store account. The amount remaining on your card disappears. Rumors have surfaced on forums and blogs that some people have had their iTunes accounts permanently disabled after using fraudulent gift cards. If your account is disabled, you permanently lose access to all purchases stored on your computer, unless you back up your library or keep everything on your iPod/iPhone.

Why doesn't Apple do anything?
Apple is concerned about the impact of fraud on iTunes, not the impact on you. According to the company's terms of service, posted online, "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." In other words, the company has covered its back but you're out there flapping in the wind.

What to look for.
Watch out for sellers only offering iTunes cards and only in bulk amounts, located outside the U.S. and/or at less than 75-percent of the face value.

Watch for hacked accounts.
Any eBay account can be hacked and stolen. You can identify hacked accounts because they frequently won't include feedback for months or years and suddenly start receiving tons of feedback solely for iTunes sales. (Hackers usually target inactive accounts so the actual account owner won't notice the hack.) To avoid fraud, only purchase U.S. iTunes from verified sellers with PayPal accounts in the United States and transactions of physical items within the country.

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