Google is not obligated to refund victims of Google Play gift card scams

In a recent federal court ruling, Judge Beth Freeman found that Google is not required to refund money to users who are victims of fraud scams. Google Play gift cards. (h/t: Ars Technique)

The case brought by plaintiff Judy May centers around a common but often underappreciated scam tactic: tricking people into buying gift cards under false pretenses. Freeman’s decision largely favors Google, highlighting the tech giant’s legal distance from liability in cases where transactions are manipulated by third-party fraudsters.

The lawsuit began when May, a victim of a scam in 2021, lost $1,000 after she was tricked into buying Google Play gift cards as part of a government grant scam. May was told to share her gift card codes to supposedly cover the grant’s “processing fee” but later discovered she had been scammed. When she requested a refund from Google, the company denied her request, citing its policy of refusing refunds for gift card transactions.

According to the Federal Trade Commission (FTC), Google Play gift cards accounted for approximately 20 percent of all reported gift card scams between 2018 and 2021, with cumulative losses amounting to more than $17 million. May said Google recognizes the prevalence of such scams and should do more to educate consumers about the risks, perhaps by adding clearer warnings to the gift cards themselves.

Judge Freeman ruled in favor of Google’s motion to dismiss most of May’s claims, emphasizing that Google played no direct role in promoting the fraud. “Economic harm may be suffered due to the fraudulent actions of third-party fraudsters rather than due to omissions or misrepresentations on Google’s part,” Freeman wrote.

Because the company takes a commission of 15 to 30 percent on Play Store purchases made using gift cards, the lawsuit alleged that Google benefits financially from the very scams it refuses to fight. However, the judge found this argument insufficient, emphasizing that May’s losses arose from the misuse of gift cards and were not related to any fraudulent activities on the part of Google itself.

The judge rejected the claim for treble damages, reasoning that May’s knowledge of the fraud made her less likely to be defrauded again, making it difficult to argue for additional damages. However, Freeman gave May the opportunity to amend parts of her complaint within the next 45 days.

Google also says its stance on gift card refunds is consistent with the policies of other major retailers, including Walmart and Target, which also refuse to issue refunds for fraudulent gift card purchases.

This ruling sets a somewhat troubling precedent by effectively absolving Google of any responsibility to protect its users from fraudulent activity. While it cannot be denied that the perpetrators of these crimes are scammers, Google’s awareness and inaction regarding these scams does raise some ethical concerns.

The judge’s decision also serves as a reminder of the limitations of consumer protections in cases involving gift card fraud. It is now more important than ever that people are vigilant and take steps to protect themselves from online scams. Remember the golden rule: if it sounds too good to be true, it probably is.