Visa Hit With a Lawsuit

( – Approximately 50% of consumers purchase gift cards for other people because they’re a convenient method. Some of them are Visa cards. The credit card company is now being sued over an alleged gift card scam.

On January 30, a class-action lawsuit was filed against Visa in New York federal court. The suit follows one that was filed in November, by San Francisco City Attorney David Chiu in a California federal court alleging InComm’s “One Vanilla” and “Vanilla Gift” non-reloadable Visa Reward Cards did not have enough packaging or security features to protect them. The California case didn’t name Visa as a defendant.

According to both lawsuits, the cards, which are sold at stores like Target and CVS, are in thin cardboard sleeves that scammers can open and gain access to the account information.

After the thieves record the card information, they reseal the packages and put them back on the shelf. They can then monitor the card using a website. When the money is loaded onto the gift card, the thief spends it, a scheme known as “card draining.”

What’s worse is that when the gift recipient or purchaser learns the cards have been drained and report it, InComm and its partners refuse to reimburse the victims or provide refunds.

Chiu said that because of the companies’ “years-long negligence, numerous consumers and gift recipients” have been the victims of these card-draining scams.

A representative for Vanilla Gift released a statement to CBS News and denied the allegations in the lawsuit. The company said the complaint has “no basis in fact or evidence.” The spokesperson claimed the company maintains an “unwavering commitment to industry-leading security practices,” which includes collaborating with law enforcement and others.

Ira Schuman is leading the New York lawsuit. The plaintiff claims that he purchased eight $500 Vanilla cards in 2022 and 2023, then learned the cards had already been emptied. He said the companies refused to issue a refund.

Both lawsuits are asking for monetary damages.

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