Visa was sued on Tuesday by consumers who said the cardboard payments network didn’t make prepaid “Vanilla” gift cards less prone to being drained by thieves.
Ira Schuman, who leads the proposed class motion within the White Plains, Latest York, federal court, said he bought eight $500 Vanilla cards as holiday gifts for his employees in 2022 and 2023, only to learn later that cards had been emptied.
In accordance with the grievance, the non-reloadable debit cards are sold at CVS, Goal, Walgreens and other grocers and retailers in thin cardboard sleeves that thieves can open and, after recording account information, reseal without being detected.
Thieves can then monitor http://www.vanillagift.com to learn when money has been loaded, and make purchases using the stolen account information, the grievance said.
The scam is often known as “card draining.”
Visa was sued on Tuesday over a present card scam. Asia Grace
Schuman, of Scarsdale, Latest York, said Visa and two Vanilla card issuers knew or must have known that their cards were vulnerable to tampering but didn’t add security measures, and didn’t provide refunds when money was stolen.
Visa and the opposite defendants, Incomm Financial Services and Pathward Financial, didn’t immediately reply to requests for comment.
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.
Tuesday’s lawsuit accused the defendants of violating a Latest York state law against deceptive and unfair consumer practices.
The scam involves the gift cards being emptied before they’re redeemed. Getty Images
It seeks compensatory and punitive damages for individuals who bought Visa-branded Vanilla cards in Latest York since Jan. 30, 2021 and saw their funds drained.
The case is Schuman v Visa USA Inc et al, US District Court, Southern District of Latest York, No. 24-00666.
