SFALP Files Suit in Gift Card Scamming Case

With the help of the San Francisco Affirmative Litigation Project (SFALP) at Yale Law School, the San Francisco City Attorney’s Office (SFCAO) filed suit against the makers of Vanilla gift cards, Incomm Financial Services, Inc. (Incomm), and its partner banks for deceptive and unfair competition practices. 

SFALP students Isabelle Zaslavsky ’24, Otelo Reggy-Beane ’25, and Lorena Essak-Hernandez ’25 helped identify key facts, develop legal theories, and refine the complaint. 

“They were integral members of the team,” said Deputy City Attorney John George. “The students assisted in a number of capacities — researching potential allegations, refining the complaint, and even helping us plan a litigation strategy. At every stage, their work was outstanding.”

The popular Vanilla gift cards, which can be found in numerous retailers around the country as Mastercard and Visa cards, have insecure cardboard packaging. This makes the cards susceptible to “card draining,” a practice in which a scammer surreptitiously obtains the Vanilla card number from beneath its cardboard packaging, reseals the card, and then spends the gift card balance as soon as the card is activated. As a result, consumers regularly attempt to use their cards for the first time only to find that the card has no funds left on it.

The complaint alleges that Incomm has known about the obvious security problems for a decade but has refused to remedy the issue by improving the packaging or providing refunds to affected consumers. Despite state laws limiting consumer liability and requiring refunds of unauthorized transactions, Incomm often refuses to provide refunds to consumers who have been scammed. Many consumers either never hear back from Incomm or are placed on hold for hours. Other consumer complaints state that Incomm refused to issue a refund, claiming that its internal investigation concluded the consumer’s card was physically present during the fraudulent transaction, even when the transaction occurred hundreds of miles away and right after the card was purchased and activated.

“I am glad that SFCAO filed this suit, especially during the holiday season when consumers are likely to buy these cards as presents. The company’s persistent omission in disclosing the heightened vulnerability of their cards to theft stands out as a glaring issue,” said Zaslavsky. “Their refusal to issue refunds for unauthorized charges, especially in instances where their inadequate security measures are to blame, further underscores their negligence.”

SFALP partners students with San Francisco Deputy City Attorneys to conceive, develop, and litigate some of the most innovative public-interest lawsuits in the country — lawsuits that tackle problems with local dimensions but national effects. The clinic, founded in 2006, is run by Yale Law School Dean Heather K. Gerken.

“I’m grateful I had the opportunity to work with fantastic lawyers and learn how a case develops over time,” said Essak-Hernandez. “It’s an honor to work with the San Francisco City Attorney’s Office to protect consumers, not just in San Francisco but across the state of California and even across the country.”

Deputy City Attorney David Louk ’15, who participated in SFALP as a student, was excited to work with SFALP students as a part of the affirmative litigation team. 

“I remember the first time I helped draft a complaint for the Office as a law student in SFALP, and I realized the ingenuity of the Affirmative Litigation team in bringing novel and creative lawsuits to identify and remedy real-world problems, hold wrongdoers accountable, and bring justice to the people of the City and County of San Francisco as well as California,” Louk said. “My time in SFALP was so formative in shaping my interests and skills as a budding lawyer. Now that I’m ‘on the other side’, it’s incredibly gratifying to pay it forward and mentor and support the next generation of exceptional public interest lawyers through the SFALP clinic.”