A group of consumers has filed a lawsuit against the Visa card company, claiming that the card payment network failed to take adequate measures to prevent theft of funds from prepaid “Vanilla” gift cards. According to ReutersIra Schuman, who is leading a proposed class action in federal court in White Plains, New York, alleged that he purchased eight “Vanilla” gift cards worth $500 each as Christmas gifts for employees in both 2022 and 2023. disappointed when he later found out the cards had been emptied, prompting him to take legal action.
In his complaint, Mr. Schuman alleged that Visa and two “Vanilla” card issuers were aware of the vulnerability of their cards to tampering but failed to provide refunds when funds were stolen. He also claims the defendants violated a New York state law prohibiting deceptive and unfair consumer practices.
According to the complaint, the non-reloadable debit cards are widely available at popular retailers such as CVS, Target, Walgreens and various grocers. The cards are usually packaged in thin cardboard sleeves, which unfortunately present an opportunity for theft. Thieves can open these covers, record the account information, and then close them again without arousing suspicion or being noticed. They can then monitor www.vanillagift.com, see when funds have been loaded and make purchases using the stolen account information, the complaint said. The scam is known as 'card draining', it added.
According to ReutersMr. Schuman is now seeking both compensatory and punitive damages on behalf of individuals who purchased Visa brand Vanilla cards in New York since January 30, 2021 and experienced the unfortunate depletion of their funds.
Meanwhile, in a similar case in November, San Francisco City Attorney David Chiu sued Incomm, Pathward and two card issuers over the Vanilla cards. Visa, based in San Francisco, was not named as a defendant.
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From DailyExpertNewsThe lawsuit alleges that InComm and its partners “have known for years that the lax security features of the non-reloadable Vanilla payment card have led to numerous card depletion incidents,” but “have not sufficiently improved the packaging of the cards or otherwise changes have been made to prevent those losses.
The complaint subsequently accused InComm of poor customer service, saying “in violation of their legal obligations, Defendants regularly fail to provide refunds for unauthorized transactions on Vanilla cards.”