Visa Sued In US Over "Vanilla" Gift Card Scam Known As "Card Draining"

Ms Schuman has alleged that Visa and two "Vanilla" card issuers were aware of their cards' vulnerability to tampering but did not provide refunds when money was stolen.

A group of consumers have filed a lawsuit against the Visa card company, claiming that the card payments network did not take adequate measures to prevent the theft of funds from prepaid "Vanilla" gift cards. According to Reuters, Ira Schuman, who is leading a proposed class action in the federal court of White Plains, New York, claimed that he bought 8 "Vanilla" gift cards worth $500 each as holiday gifts for employees in both 2022 and 2023. However, he was disappointed to find out later that the cards had been emptied, which led him to take legal action. 

In his complaint, Mr Schuman has alleged that Visa and two "Vanilla" card issuers were aware of their cards' vulnerability to tampering but did not provide refunds when money was stolen. He also alleges that the defendants have violated a New York state law that prohibits deceptive and unfair consumer practices. 

According to the complaint, the non-reloadable debit cards are commonly available for purchase at popular retailers such as CVS, Target, Walgreens, and various grocers. The cards are typically packaged in thin cardboard sleeves, which unfortunately present an opportunity for theft. Thieves can open these sleeves, record the account information, and then reseal them without raising suspicion or being detected. They can then monitor www.vanillagift.com, to learn when money has been loaded, and make purchases using the stolen account information, the complaint said. The scam is known as "card draining," it added.