Vanilla Gift Card Issuer Faces Lawsuit Over Card Theft Fraud Risk

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A gift card issuer is facing a lawsuit over allegations that it failed to make its popular prepaid cards less susceptible to a common scam.

The lawsuit, filed last month by San Francisco City Attorney David Chiu, alleges that Incom's non-reloadable “Vanilla Gift” and “One Vanilla” cards featured “insufficient” packaging and “lax security features.” “that made them susceptible to scams.

According to the complaint, the gift card packaging allows “easy access to the interior of the card,” allowing thieves to record the barcode and PIN information so they can make unauthorized transactions, a practice known as card drain.

The complaint also alleges that Incomm failed to improve its product packaging despite knowing that the defective design led to incidents of theft.

“As a direct result of Incomm's years of negligence, numerous consumers and gift recipients have been unnecessarily subjected to card draining,” Chiu alleged in the lawsuit.

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The lawsuit also alleges that when victims reported their funds stolen, Incomm and its partners failed to reimburse them and refused to provide refunds, the complaint states.

Card drain: what it is and how to avoid it

Card draining is a scam in which scammers carefully remove an unpurchased gift card from its packaging, record its number and PIN code, and then return it to its original packaging. according a Consumer Reports.

Once an unsuspecting victim purchases a tampered card and loads funds onto it, the thief will use the stolen information to make unauthorized purchases, depleting the prepaid funds on the gift card.

Compromised gift cards can be difficult to detect, but there are several ways consumers can protect themselves from being scammed, according to Pennsylvania Attorney General Michelle Henry.

Before purchasing a gift card, consumers should always examine the card's packaging for any damage and make sure the scratch-off cover that hides the card's PIN number is intact, Henry advised in a consumer article. warning.

If a consumer discovers that a card they purchased has been compromised, they should immediately report the problem to the card company and request a refund, according to Henry.



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