In a significant legal move, the San Francisco Affirmative Litigation Project (SFALP) at Yale Law School, in collaboration with the San Francisco City Attorney’s Office (SFCAO), has initiated legal proceedings against Vanilla gift cards’ manufacturers, Incomm Financial Services, Inc. (Incomm), and its partner banks. The lawsuit alleges deceptive and unfair competition practices related to the insecure cardboard packaging of the popular Vanilla gift cards.
SFALP students Isabelle Zaslavsky ’24, Otelo Reggy-Beane ’25, and Lorena Essak-Hernandez ’25 played pivotal roles in identifying crucial facts, developing legal theories, and refining the complaint. Deputy City Attorney John George acknowledged the students’ integral contributions, emphasizing their outstanding work at every stage of the legal process.
The lawsuit targets Vanilla gift cards, widely available as Mastercard and Visa cards in retailers across the nation, due to their vulnerable cardboard packaging. This packaging flaw exposes the cards to “card draining,” a scam where scammers obtain the card number discreetly, reseal the card, and deplete the gift card balance immediately upon activation. Consequently, consumers often discover their card has no funds left when attempting to use it for the first time.
The complaint contends that Incomm has been aware of the security issues for a decade but has failed to address the problem by enhancing packaging or offering refunds to affected consumers. Despite state laws limiting consumer liability and mandating refunds for unauthorized transactions, Incomm frequently denies refunds, leaving affected consumers in frustration. Some consumers report never receiving responses from Incomm, while others endure extended hold times. Instances have been documented where Incomm refuses refunds, alleging the consumer’s card was physically present during fraudulent transactions, even when such transactions occurred far from the card’s purchase and activation.
Isabelle Zaslavsky expressed her satisfaction with SFCAO’s legal action, particularly during the holiday season when Vanilla gift cards are commonly purchased as presents. Zaslavsky highlighted the company’s persistent failure to disclose the heightened vulnerability of their cards to theft and their reluctance to issue refunds for unauthorized charges caused by inadequate security measures.
SFALP, founded in 2006 and led by Yale Law School Dean Heather K. Gerken, focuses on partnering students with San Francisco Deputy City Attorneys to address innovative public-interest lawsuits with local impact and national consequences. Lorena Essak-Hernandez expressed gratitude for the opportunity to work on a case that safeguards consumers not only in San Francisco but also across California and the entire nation.
Deputy City Attorney David Louk ’15, who was once a student participant in SFALP, conveyed excitement about working with SFALP students as part of the affirmative litigation team. Reflecting on his formative experiences, Louk expressed satisfaction in mentoring and supporting the next generation of exceptional public interest lawyers through the SFALP clinic.
