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]