Once portrayed as the safest of shopping environments, Apple’s iTunes Store and in particular its App Store, has received hundreds of online complaints from consumers who say that their accounts have been hijacked or that some apps are falsely advertised. Also complaining are the creators of apps, who say they have to deal with fraudulent purchases that drain their time and resources. Software makers also complain that competition in the App Store has become so brutal that many companies resort to artificially inflating their popularity rankings to grab attention.

Generating billions of dollars in revenue for Apple and its developers by offering more than 600,000 applications for iPhones, iPads and iPod Touches makes the App store a target for cybercrime. The targets include both the software makers and the consumers.  Apple declined a request for an interview, but said in a statement that it was working to enhance security. It advised customers whose payment information had been stolen to change their iTunes passwords and to contact their financial institutions.

The Web is rife with App Store scams. On Chinese online marketplaces, like Taobao or DHgate, some sellers are offering access to iTunes accounts for as little as $33. One seller on DHgate, for instance, has sold 56 iTunes accounts for less than $35 each, promising thousands of dollars in “credit.”

There are services that claim to generate codes for iTunes gift cards, and forums that explain how to use prepaid Visa cards to get free App Store purchases.

For developers, the scams can cause big headaches, eating up resources and damaging their reputations. Several game makers in China, where many of the hacks appear to originate, said they had lost hundreds of thousands of dollars because of fraud.

Hoolai Game, a Beijing-based developer that introduced an iPhone app last year, looked at its monthly payments from Apple and found that they were roughly 20 to 50 percent less than the sum of the daily reports it gets from the company. Hoolai and others say they believe these missing payments are fraudulent transactions that are refunded to customers by Apple.

More troubling for developers is that consumers whose accounts have been improperly charged often blame the game makers. The reviews in the App Store for Kingdom Conquest, from the Japanese game giant Sega, include dozens from incensed users who accuse Sega of robbing them. Sega, which first noticed a burst of fraudulent transactions last summer, is still working on the problem, according to Ben Harborne, a brand manager at the company.  A developer’s reputation is very important and they have no way to tell customers that they are victims too.

Linda Webb aka The Fraud Dog, leading fraud expert, says it is imperative that all Apple users do their part in reporting fraudulent activity on their Apple accounts.  The Fraud Dog says that there are ways to avoid this type of fraudulent behavior. Users should consider using an iTunes gift card as a form of purchase rather than a credit card. For example, putting a $25 iTunes gift card down as your form of payment.  This prevents fraudsters from gaining access to your bank account and will prevent hundreds of dollars from coming out of your pocket. By limiting the amount of money available to the fraudster, you limit your financial exposure.

To report potentially fraudulent activity, contact the Fraud Dog at 1-855-FRAUD-DOG.





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