Google defeats lawsuit over gift card fraud

San Jose (Reuters): A federal judge dismissed a proposed class action lawsuit accusing Google of illegally profiting from Google Play gift card scams by refusing to refund millions of dollars stolen from victims.

In a late Monday decision, US District Judge Beth Labson Freeman said the plaintiff Judy May lost money because scammers induced her to buy gift cards, and failed to show that Google caused her losses or knew it was receiving stolen funds.

The San Jose, California-based judge also said Google was not liable for keeping 15% to 30% commissions on purchases that scammers made with the gift cards, because Google's conduct was unrelated to the original fraud.

May said she lost $1,000 in April 2021 when a scammer posing as a relative instructed her to contact a supposed government agent, who told her she was eligible for federal grant money if she bought Google Play gift cards.

The Brownsville, Indiana resident said she provided the codes on the back to cover supposed upfront costs, but the scammers used the codes to make purchases.

May said she would not have bought the cards had Google warned on the packaging about scams, and that anyone demanding payment with the cards was a scammer.

Lawyers for May did not immediately respond on Tuesday to requests for comment. Google, a unit of Alphabet, did not immediately respond to similar requests.

Freeman said May could try to refile her lawsuit, but dismissed a claim seeking triple damages for good.

Alphabet is based in Mountain View, California.

In 2023, Americans lost $217 million in gift card or reload card fraud, according to the Federal Trade Commission.

The actual amount is likely much higher because the data cover only reported cases. Citing FTC data from 2021, May said Google Play cards account for about 20% of gift card scams.