Don’t Make Payments via iTunes Gift Cards. It’s a Scam.

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Updated on Wednesday, June 15, 2016

iTunes Gift Cards

Thanks to the Federal Trade Commission, we’re more aware of money wiring schemes. We know to send emails from long lost relatives requesting a wire transfer directly to spam. And to ignore mail from companies promising us a huge cash prize after we pay a “small fee” through money wire. What they really plan to do is get their hands on that small fee and then disappear.

Unfortunately, whenever we catch on to a scam, career criminals become more resourceful. The newest way to scam people out of cash is through iTunes gift card.

How iTunes Gift Card Scams Work

The reason con artists like to request money wires is it allows you to send money far away. It’s also difficult to recover money once it’s wired. A credit card payment, on the other hand, may be trackable or even reversible.

Sending money through iTunes gift card presents the same opportunity as a wire transfer. It’s difficult to track where the cash goes after the gift card is drained. If you find out later you’ve been scammed for money, the chances that you’ll get the money back that was on the card are slim.

Here’s how the scam works: Someone will ask you to buy an iTunes gift card, then tell you to give them the serial number on the card. Once they have the serial number, they either drain the cash on the card or sell the card online.

A scammer may ask you to use an iTunes gift card to give them money for various reasons, including some of the same reasons that are common with wire transfers, like:

  • Assisting a relative or friend in need
  • Repaying an old debt
  • Pay for an item being sold online
  • Paying a fee to accept a prize
  • Paying back taxes

The Scam to Look Out for Growing in Popularity

At the beginning of this year, the Treasury Inspector General for Tax Administration (TIGTA) reported that since October 2013 over 5,000 people have fallen victim to IRS phone scams and paid out over $26.5 million as a result.

One popular IRS phone scam is when someone impersonating an IRS or Treasury agent threatens arrest, deportation, and other consequences if you don’t pay up.

What’s one way they ask you to pay a phony tax bill? You guessed. iTunes gift card.

Since ignoring a valid tax bill can result in wage garnishment and even jail time, we’re all hyper-vigilant of any correspondence from the IRS. But, if someone calls to demand a tax payment with an iTunes gift card, something is wrong.

When the IRS wants to get your money for real, they will not resort to threatening you over the phone for payment right away. You get an opportunity to appeal. They will never ask you to pay through iTunes gift card. If you’re uncertain of a request for payment, go to the IRS contact website and reach out to the agency directly.

What to Do If You Get a Request for iTunes Gift Card

Crooks are good at what they do. They know the buttons to press to get a victim to fall for the con. If someone’s living paycheck to paycheck, a prize scam is going to look mighty enticing. If someone’s petrified of going to prison, they may be more inclined to pay these “taxes” to avoid the slammer.

Don’t act off impulse when any gift card is in the equation. iTunes gift cards should only be used to make iTunes and App Store purchases. Apple has even addressed this problem on the website.

According to the Apple gift card page:

“iTunes Gift Cards are solely for the purchase of goods and services on the iTunes Store and App Store. Should you receive a request for payment using iTunes Gift Cards outside of iTunes and the App Store, please report it at ftc.gov/complaint.”

4 Safer Ways to Pay or Get Paid

One way to avoid the iTunes gift card scam and any other scam that involves a money transfer is never sending cash to someone you don’t know. When circumstances come up where you need to exchange money for personal or business use, there are better avenues to do so than iTunes gift cards, here are a few:

1.PayPal

Signing up for a PayPal account is free, but there are some fees for certain transactions. Here’s the fee schedule for sending money:

Sending Money Domestically

  • From your PayPal balance or bank account – Free
  • From your debit or credit card – Flat fee of $0.30 plus 2.9%

Sending Money Internationally

  • From your PayPal balance or bank account – 0% to 2%
  • From your debit or credit card – 2.9% to 5.99% plus a fixed fee based on the payment currency

If you sell a product or service through PayPal, there’s a 2.9% + $0.30 fee per transaction for the seller (and an even higher fee for international transactions). Buying from a merchant with PayPal is always free.

2.Venmo

Do you casually exchange money with family and friends? Venmo is part of PayPal and a solution for small, quick transactions between people who know each other. It’s particularly useful on the go, when dividing a restaurant bill for instance. No more getting stuck with the bill!

Download and sign up for the account for free. Then add money to your Venmo account balance or link your Venmo account to your bank account, debit or credit card. Data security is always a concern when adding your financial information to any online account. Venmo uses data encryption and secure servers.

Sending money with a debit card is free for major banks. Debit card transactions from some smaller banks may have a 3% fee. All payments through credit card cost 3% as well. Credit cards may also incur a fee.

3.Square Cash

You can use Square Cash for personal and business use. If you’re using the app to send and receive money from family and friends with your bank account, you can do so for free. You will pay a fee if you have to send money through credit card and that fee is 3%.

Using Square Cash for business isn’t free, and you’ll have to note that you plan to accept payment in exchange for products and services when you set up an account. The processing fee for businesses is 2.75% per payment received.

4.Google Wallet

Google Wallet works similar to each other system we discussed above. You can download the app for free on your iPhone or Android. To send money, you just need either the email or phone number of whoever the money is going to. Google Wallet also comes with 24/7 fraud monitoring which is unique. Sending and receiving money with Google Wallet is free.

Always Report a Scam

If you encounter anyone requesting iTunes gift cards for payment, run for the hills. And make sure to report it. You reporting a scammer may prevent someone less suspecting from falling for the same person’s con.

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