Background

The issue of fraudulent crypto-related mobile apps has received much attention of late.  Back in July 2022, the FBI issued a notice, warning financial institutions and investors about instances where criminals created spoofed cryptocurrency wallet apps to trick consumers and steal their cryptocurrency. There have also been reports of phishing websites that attempt to trick consumers into entering credentials, thereby enabling hackers to access victims’ crypto wallets. In response to these developments, Senator Sherrod Brown recently sent a letter to Apple, among others, expressing his concern about fraudulent cryptocurrency apps and asking for more information about the particulars of Apple’s process to review and approve crypto apps for inclusion in the App Store.

In a recent ruling, a California district court held that Apple, as operator of that App Store, was protected from liability for losses resulting from that type of fraudulent activity. (Diep v. Apple Inc., No. 21-10063 (N.D. Cal. Sept. 2, 2022)). This case is important in that, in a motion to dismiss, a platform provider was able to use both statutory and contractual protections to avoid liability for the acts of third party cyber criminals.