‘Ongoing Scam’: Lawsuit Says Visa Knows Vanilla Gift Cards Are Vulnerable to Tampering

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A proposed class action lawsuit alleges Visa has failed to warn the public that its Vanilla gift cards are regularly redeemed fraudulently by third parties who can access a card’s account number by tampering with the card’s packaging. 

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The 17-page case against Visa, gift card administrator InComm Financial Services and gift card issuer Pathward, N.A. says the companies knew, or should have known, that Visa’s Vanilla gift cards were “subject to an ongoing scam” whereby the funds of a card are wrongfully drained by a bad actor before the card’s rightful owner can access the money. As the suit tells it, thieves can monitor the balance of a particular Visa Vanilla card by entering its 16-digit number, expiration date and CVV on VanillaGift.com and make their own transactions until the funds are depleted. 

Moreover, the case alleges the defendants have refused to refund consumers who have complained upon realizing that their Visa Vanilla gift card had no value and failed to put in place and maintain “reasonable security procedures and practices” to protect proposed class members’ money. 

“Defendants are aware of this problem and have failed to make necessary improvements to the security features of Visa Vanilla cards to prevent the known and widespread fraudulent conduct,” the complaint alleges, accusing Visa, InComm and Pathward of enabling the fraudulent use of Vanilla gift cards by failing to warn consumers that the cards are vulnerable to tampering and theft due to the “defective design” of their packaging.

According to the case, Visa Vanilla gift cards are prepaid debit cards sold at CVS, Walgreens, supermarkets, gas stations and numerous other stores. The nonreloadable cards, which come with a one-time $5.95 purchase fee, can be used for transactions online and anywhere Visa debit and credit cards are accepted and are often given as gifts by purchasers, the filing says. 

The case alleges in particular that the “manner in which Defendants package and sell” the Visa Vanilla gift cards—in “thin cardboard sleeves that can be easily opened and reclosed” in a way a reasonable consumer would not suspect—enables the funds on the cards to be stolen. 

“Thieves take advantage of the defective packaging to quickly open it, access the card, record the card’s account numbers, and then reseal the package and return it to a store’s rack without being detected by the retail store or the consumer. The thieves then monitor the card’s balance on Vanillagift.com.” 

Per the case, a thief can also place a barcode from a card they already have on an unsold Visa Vanilla card, and when a consumer loads cash onto the card, it is instead loaded directly onto the thief’s Vanilla card. 

According to the complaint, the plaintiff, a New York consumer, purchased $2,000-worth of Visa Vanilla gift cards in December 2022 and December 2023. In each instance, the plaintiff learned shortly from the recipients of the cards that the funds had been drained, the case says. 

The lawsuit looks to cover all persons who bought a Visa Vanilla card in New York that had its funds drained prior to use by the consumer or its intended recipient. 

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