SAN FRANCISCO -- San Francisco City Attorney David Chiu is making a bold pre-holiday move designed to help consumers with their gift card purchases. He has filed suit against a giant in the gift card business: Incomm, makers of Vanilla brand gift cards. These are the cards you find on racks in places like Walmart and Walgreens.
"Consumers who are buying the gift cards known as Vanilla gift cards are getting scammed out of hundreds of dollars," David Chiu says. "The typical scenario is a consumer purchases a Vanilla gift card, and as soon as they go to use them they find out that the balance is zero."
Chui's complaint says thieves take cards from the rack, steal their codes, then put the cards back on the rack for unsuspecting buyers who then load them with cash.
"This is a scam known as card draining," Chiu says, "It's a relatively unsophisticated crime. It's made possible by Incomm's inadequate security."
Chiu told me, "Incomm has been regularly refusing to provide refunds to consumers who've lost money, which is in violation of state and federal law."
InComm Payments provided this statement: "Fraud prevention is a top priority at InComm Payments, and we continuously collaborate with security experts, merchant partners and law enforcement to combat emerging threats. We are aware of the lawsuit and, while we do not comment on active litigation, we stand by the quality of our products and will vigorously defend the allegations in the complaint. We remain committed to serving our customers with reliable prepaid card products and payments technology solutions."
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
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