Reports continue to surface of people buying gift cards that represent well-known companies like Visa, only to find the balances on them to be at or near zero. The latest is from the investigative unit at a Boston TV station, following similar reports last month from local news outlets in Atlanta, Charlotte, and Raleigh.
But this is more than a local story. The complaints center on InComm, an Atlanta-based company that sells its own proprietary Visa Vanilla gift cards, as well as Mastercard, American Express, and other brands. Although InComm hasn’t been accused of participating in the fraud, the company’s security measures have come under increased scrutiny.
According to WFTV in Orlando, more than 1,300 complaints have been filed against InComm with the Better Business Bureau over the past year, with many of the customers complaining that their cards were not working or that the balance had all been spent before the consumer had even obtained the card. WFTV spoke to one woman who was told that her Vanilla Visa card’s balance had all been spent on PlayStation games—even though she doesn’t own a PlayStation.
InComm Facing Lawsuits
Earlier this month, San Francisco City Attorney David Chiu filed a lawsuit against InComm. Chiu alleges that thieves take gift cards from a rack, steal the codes, then place the cards back on the rack for unsuspecting buyers to purchase. Chiu blamed InComm’s “inadequate security” for the problem.
In addition, Graham LippSmith, an attorney from Los Angeles, has filed a class-action lawsuit against Incomm on behalf of Vanilla gift card users. The lawsuit alleges three possible reasons for the continuing problems: an inside job by a rogue InComm employee, a breach of InComm’s cybersecurity protocols, or that hackers have cracked InComm’s algorithm for creating card numbers. LippSmith also claims that InComm put up “barriers through difficult and time-consuming customer service processes” that have made it difficult for defrauded consumers to get their money back.
It’s important to keep in mind that most gift cards are safe and secure. “This type of theft continues to be worrisome in the industry, but overall these issues occur less than 10% of the time across all prepaid card products, according to Javelin’s research,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “In addition, our research indicates that consumers are nearly twice as worried about losing a card as they are about balance depletion theft.”
A Longstanding Problem
InComm has been addressing these issues for some time; the company was singled out for scrutiny in a Reddit post as many as eight years ago. Although InComm hasn’t addressed individual cases, it has said it is working on the problem. “Our privacy and policy restrictions prevent us from commenting on individual consumer situations, but we are reviewing their information and will contact each of them to provide an update,” the company said in a prepared statement. “Fraud prevention is a top priority across our company. We are constantly working to ensure consumers can safely use their gift cards by developing new methods and techniques that mitigate the risk of potential fraud.”
For consumers who think they may have received a tampered gift card, InComm recommends reviewing “the account balance on their product’s official website, which is printed on the back of their card.” InComm also asked that people call the customer care phone number on the back of their card immediately to report an issue.