Apple Now Refusing To Accept Their Own Gift Cards For iPhone

Apple’s latest tactic for stopping consumers from unlocking their iPhones is to refuse their own gift cards as payment for them.

CNet’s Chris Soghoian points out that this is of questionable legality:

There does not appear to be any small print on the gift card program Web site stating that Apple reserves the right to reject gift cards for any purchase or change the terms and conditions after the fact.

On Monday afternoon, I spoke with Professor Avery W. Katz, vice dean and Milton Handler Professor of Law at Columbia Law School. Katz regularly teaches classes in contracts, secured transactions, and payment systems.

When asked if he had heard of any other companies refusing to take their own store gift cards in the past, Katz replied that “(this is) a new one to me,” and that he believes that “most customers will be surprised to learn that their gift cards will not be accepted” for the purchase of items from a company’s official store.

Professor Katz noted that even if Apple’s gift cards were covered by a small-print or shrink-wrap contract, “in the case of a consumer purchase, not everything in the fine print of a consumer contract is enforceable. This area is one of some controversy in contract law.” In general, he said, “the enforceability of these fine-print terms depends on how reasonable the fine print is and what a consumer can reasonably expect of the sale.”

Katz also confirmed that the courts did not expect consumers to have legal counsel read the terms of a gift card before they buy it in the store. He further noted that different states’ laws apply, and in particular that some states’ laws are far more pro-consumer than others.

Chris smells “class action lawsuit” in the air, and although we have never heard of a similar lawsuit, we wouldn’t be surprised if an Apple zealot managed to cook up at little something for Apple’s lawyers to chew on. After all, if your customers will sue you for simply dropping your prices, they’ll certainly not hesitate when you do something truly objectionable.

We suppose the real question is: Will Apple be refunding gift cards given to customers who wanted an iPhone? If not, it is appropriate for consumers to do a chargeback.

Apple plays with fire, courts iPhone gift card lawsuits [CNet]

Comments

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  1. missdona says:

    eeevil.

  2. Falconfire says:

    UMMMmmmmm the only place I have even heard of Apple refusing gift cards, is Cnets own site which as anyone in the tech sector knows, is a paid shrill for Microsoft and constantly puts down and bashes Apple.

    So until Apple, someone who works for Apple, or someone who tried ot purchase a iPhone from Apple steps forward and says they where refused a purchase via a gift card, this is all hearsay and most likely Cnet bullshit.

  3. m. mangosteen says:

    I don’t get it – what’s the point of not allowing gift cards?

  4. howie_in_az says:

    Why would refusing a gift card purchase of an iPhone prevent the user from unlocking it? This seems awfully stupid on Apple’s part, if it’s true.

  5. cde says:

    @m. mangosteen: It’s to try to close a “loophole” of Cash -> Giftcard -> iPhone when they won’t allow cash -> iPhone.

  6. Streyeder says:
  7. emona says:

    This is part of their new “credit card only, no cash” policy to (presumably) make tracking the purchase easier. I’ll bet it’s changed in a few weeks once they catch enough flack. Be happy I’m buying your crap, and definitely don’t tell me how I can go about buying it.

  8. oilguy says:

    I wondered how long it would take the Apple apologists to strike. Second post, nicely done.

    FWIW, this story is being carried (and has been independently confirmed) by WIRED, which as anyone in the tech sector knows, is a paid *shill* for Apple and constantly puts down and bashes Microsoft.

  9. davebg5 says:

    @howie_in_az: They want all purchases of iPhones to be on a credit card so they can track the purchases. People are buying large qty of iPhones for the purposes of unlocking and reselling them (Apple estimated something like 200k of the iPhones purchased were done so w/that intent). The problem (from Apple’s perspective) is that they get more money from AT&T (over the course of a 2 yr agreement) than they do for selling the iPhone itself, so they want to protect that revenue stream.

    Apple thinks that by limiting purchases to credit card only that they will be able to stop people from buying dozens at a time.

  10. missdona says:

    You know, they should just make it exclusive for American Express Centurian card members. Maybe that will satisfy their need to keep it out of the common folks’ hands.

  11. Canadian Impostor says:

    Can I buy an iPhone with a prepaid Visa card I paid cash for?

  12. ParkerTheDog says:

    FalconFire’s comment sparked my curiosity. I found a similar article here [www.informationweek.com] (InformationWeek was bought by CNet in 2000 [en.wikipedia.org]).

    This link [blog.wired.com] claims that it’s specific per store. It also states that Apple is doing this in an attempt to curb unauthorized reselling.

  13. Falconfire says:

    @Streyeder: That still doesnt point to a actual source for this. Even if Cnet didnt make it up, Engadget is a blogger site just like Slashdot and here, and no one has yet actually posted a SOURCE for this information. We dont need to look far to find a story about Apple that Engadget posted that was wrong (hello Apple stock scare)

    The fact is Apples own gift card description says that the only thing you can not buy with a gift card, is more gift cards.. so I seriously doubt they are blocking people from purchasing iPhones with it.

    This whole story is very fishy.

  14. ParkerTheDog says:

    I obviously misread my WikiPedia reference D’Oh!

  15. Falconfire says:

    @ParkerTheDog: which makes me wonder then since apparently stores are doing it… is it Apple authorized, or is it stores making up a rule that could quite possibly be illegal.

  16. davebg5 says:

    @Falconfire: Why don’t you call your local Apple store and ask them if they’d let you come by and purchase an iPhone w/a gift car then?

  17. MountainRooster says:

    @Canadian Impostor:
    Good point. I have never had a Visa gift card. Do you have to register it to make it work?

  18. Buran says:

    @davebg5: I’d take a car in exchange for a phone!

  19. qwickone says:

    @Canadian Impostor: Nope, the card you use must have your name printed on it. I haven’t seen those cards with names printed on them, but if they exist, you can do that.

  20. TPK says:

    Now, now, now… the sooner all you silly consumers out there get over the notion that when you are buying a cell phone, you are actually buying a cell phone, the happier you will all be!

    The simple fact of the matter is that you are entering a contract with Apple and AT&T to provide you some sort of a service. It’s not your phone. They just make you pay the lease for it all up front.

    Sheesh, why can’t you all just figure it out and get over it???

  21. Falconfire says:

    @TPK: Because with the iPhone you ARE paying for the phone. The iPhone is a unsubsidized phone and this when you buy it, its legally yours.

    The fact is Apple and AT&T is roping you into a contract but thats besides the point.

  22. Benstein says:

    Thank goodness I didn’t buy an iPhone. You might as well buy an RIAA MP3 player considering how evil Apple is being. Google is set to destroy apple with the GPhone.

  23. warf0x0r says:

    I was wondering about this. Well then. No Apple gift cards for xMas to get an iPhone. I guess I’ll check out the helio ocean.

  24. TPK says:

    @Falconfire:
    But which of our two versions of the story is closer to reality? :-)

  25. mikesfree says:

    Weird, just went through the steps to buy one and had the option to pay with gift card:

    Apple Store Credit or Apple Gift Card
    You can use your Apple Store Credit and Apple Gift Cards alone or in combination with a credit card to pay for your order. If you use your Apple Store Credit or Apple Gift Card with a credit card, we’ll charge the Store credit or Gift card first, then apply the remaining balance of your order to your credit card.

  26. ogman says:

    That’s it, I’m not buying anything else from Apple. Steve’s control issues messed that company up before, and it looks like he wants to do it again.

  27. Bladefist says:

    apple hates apple fan boys.

  28. Skeptic says:

    BY TPK AT 03:17 PM

    Now, now, now… the sooner all you silly consumers out there get over the notion that when you are buying a cell phone, you are actually buying a cell phone, the happier you will all be!

    The simple fact of the matter is that you are entering a contract with Apple and AT&T to provide you some sort of a service. It’s not your phone. They just make you pay the lease for it all up front.

    Sheesh, why can’t you all just figure it out and get over it???

    While it seems clear that you are being sarcastic it is important to repeat what FALCONFIRE said. The iPhone is a unsubsidized phone. You purchase the iPhone outright at full price whether you buy it from Apple or ATT. It is perfectly legal for you to use your iPhone with another carrier and neither Apple nor ATT may assert copyright in preventing you from doing so.

    In addition, Apple may be violating consumer laws, especially in California, that apply to gift cards. Apple cannot add retroactive constraints to gift cards. Saying they will not honor gift cards for certain purchases likely qualifies in that regard.

  29. TheSeeker says:

    I am new to ths story.
    How can Apple or anyone refuse cash for a purchase?

  30. BensAngel says:

    @TheSeeker: You need to check recent posts and comments. Basically “legal tender” is such for a debt, if you walk into a store to purchase a phone you’re not paying a debt therefore cash can apparently be refused as a payment method. I’m not the expert though. And yes, it’s crazy. And yes Apple have shot themselves in the foot. And yes, fanboys, by association, look stupid.

  31. Falconfire says:

    @TheSeeker: Because its never been against the law to not accept cash.

    All cash is, is legal tender, meaning that if you had a debt cash is a legal means of paying for it. It doesnt have to be a accepted means and many places do refuse to take it.

    Most cell phone contracts make it a point that you can NOT pay cash to a monthly bill, though you can to a pay as you go plan.

  32. chartrule says:

    Is this “creditcard only” just for the iPhone or for everything in their stores?

  33. Falconfire says:

    @chartrule: just iPhone

  34. bobblack says:

    Apple was foolish for locking themselves into a deal with AT&T.

    Now they’ve stirred up a hornets nest.

    If they had just made the phone usable for multiple providers, this wouldn’t have been a problem.

    I’ve been an Apple fanatic for 12 years and this is the first time I’ve ever started to lose respect for them as a company.