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In a proposed class action lawsuit filed on Tuesday, consumers are taking on Visa (V.N.) for reportedly failing to secure its prepaid “Vanilla” gift cards, making them susceptible to theft. 

Ira Schuman, leading the legal charge in the federal court of White Plains, New York, claims that the non-reloadable debit cards, widely sold at CVS, Target, Walgreens, and other retailers, lack necessary security measures.

Accusations Against Visa

Ira Schuman, a Scarsdale, New York resident, contends that he purchased eight $500 Vanilla cards as holiday gifts for his employees in 2022 and 2023. Shockingly, he later discovered that the cards had been emptied, prompting the legal action. 

The lawsuit claims that the cards, enclosed in thin cardboard sleeves, are easily manipulated by thieves who can open and reseal them undetected, obtaining crucial account information.

Card-Draining Scam Unveiled

According to the complaint, the scam, known as “card draining,” involves thieves monitoring the Vanilla gift card website (http://www.vanillagift.com) to learn when money has been loaded onto the cards. Armed with the stolen account information, perpetrators make unauthorized purchases, leaving cardholders in the dark until it’s too late.

Negligence by Visa and Card Issuers

The lawsuit asserts that Visa, along with Vanilla card issuers Incomm Financial Services and Pathward Financial, were aware or should have been aware of the cards’ vulnerability but failed to implement necessary security features. 

Furthermore, the defendants allegedly neglected to offer refunds to victims who suffered financial losses due to the scam.

No Immediate Response from Defendants

Visa, Incomm Financial Services, and Pathward Financial have yet to respond to the allegations or comment on the lawsuit. 

The legal action comes on the heels of a similar case initiated by San Francisco City Attorney David Chiu in November, targeting Incomm, Pathward, and two card issuers over Vanilla card vulnerabilities. Interestingly, Visa was not named as a defendant in the earlier case.

Violations of New York State Law

The lawsuit accuses the defendants of violating a New York state law prohibiting misleading and unfair consumer practices. As the legal battle unfolds, consumers affected by the supposed security lapses in Vanilla gift cards await further developments.

Visa and the other defendants’ response to these severe claims will likely shape the narrative surrounding the security of prepaid gift cards in the market.

Source: Reuters

Is Visa Stock Halal?

Visa, Inc.’s eligibility for Halal investment is scrutinized through a comprehensive analysis based on specific screening criteria. Regarding business activity, the company demonstrates commendable adherence to Shariah principles, with a Not Halal Business Activity Percentage of 2.24%, comfortably below the stipulated 5% threshold. 

Turning to the second criterion, which assesses the proportion of interest-bearing securities and assets relative to market capitalization, Visa maintains compliance with a percentage of 5.23%, well within the permissible limit of 30%. 

Likewise, the third criterion, focusing on interest-bearing debt, affirms Visa’s adherence to Shariah standards, as its interest-bearing debt percentage stands at 4.56%, below the prescribed 30%. 

All in all, Visa, Inc.’s operations in providing digital payment services align with Halal investment guidelines, making it a Halal Stock with a 3star rating.

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