Can I dispute a credit card charge for a hacked Vanilla Visa Gift Card?

Question

I bought 4 $500 Vanilla Visa Gift Cards from CVS Store #2149 in Alexandria, VA right before Christmas. I used my Citibank MasterCard to pay for the gift cards. They were for my employees as a holiday gift. The cards were located near the rear of the store in a remote and unsupervised location. By the time my employees tried to use the card, all of the funds had been drained of a total of $2,000. The funds were used at Apple Stores, Best Buy, etc. I contacted Vanilla..... it was a very frustrating process. I was on the phone to a call center in India for over an hour and a half. At the end of the call, they said I should hear back "WITHIN THREE MONTHS"!!!! They were very non-committal and just described it as a potential "unauthorized use" of the card.

I contacted CVS and they had absolutely no interest in addressing the issue.... just referred me to Vanilla. I feel that CVS has primary responsibility because they sold me a product that had obviously been compromised. With all of the lawsuits and complaints over this issue, they certainly knew that placing the cards in an unsupervised location at the back of the store was inviting criminal activity.

Can I successfully dispute the CVS charge on my personal credit card that I used to purchase these 4 gift cards?

Answer 1

There were news stories regarding this type of theft in the Washington DC area, as well as other parts of the country.

Yes, complain to the place you bought the card. Yes, complain to police. Yes, complain to your credit card company. Yes, complain to the vanilla card company.

Not complaining masks the size of the scam.

Answer 2

Reading the comments it is clear that some people misunderstand the question.

Can I successfully dispute the CVS charge on my personal credit card that I used to purchase these 4 gift cards?

The OP used a credit card to buy a bunch of gift cards which they now claim were drained. The OP is asking whether they can dispute the purchase of the gift cards, they already disputed the transactions that drained them.

The answer is - of course you can, but you won't succeed. In order for a merchant chargeback to succeed, the buyer must show that:

• either the transaction was unauthorized - that's not the case here, they did in fact purchase the gift cards,
• or they didn't get what they paid for - that's not the case here, the OP did in fact get the gift cards, the unauthorized charges appeared on the gift cards after the purchase.

Everything else is futile arguments. Yes, the OP has been scammed. No, noone will return the money to the OP unless they absolutely have to. Yes, the gift card company can probably identify this pattern of fraud. No, it doesn't mean that the OP should immediately be reimbursed, they still need to show that they are not in fact the scammer themselves.

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It is unlikely that you can successfully dispute the purchase of the debit cards, since that purchase was authorized and not fraudulent. Unless you can prove CVS to be negligent, it is unlikely that you can prevail on any claims against CVS either.

I suggest discussing this with a licensed attorney in your jurisdiction for a proper evaluation of your legal chances against any of the parties involved. I also suggest filing a police report for the fraud that occurred.

What you're describing is a pretty common theft scheme called "gift card drain": the scammers take unsold gift cards, scan them and then reseal them again in their original packaging and put them back on the store shelves. Once the cards are sold and activated the scammers have all the information they need to clear them out. There have been numerous news reports on this.

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There are several people downvoting this answer because it is based on the assumption that the OP may be lying.

So just to make sure we're on the same page: everyone but the OP wil assume that the OP is lying and the OP is in fact the one trying to scam the system.

In order to prove otherwise, the right avenue is an unauthorized charge claim against the gift card issuer, which then will be investigated by the issuer and determined to be true or false. Everyone else will deny any claim because the OP cannot prove they did anything wrong.

For people keep claiming it's trivial to determine the OP is not lying - how exactly is that trivial? The scammers are not doing anything different from legitimate users, and there's no way to distinguish a legitimate transaction from an illegitimate one without knowing anything about the user (which in case of gift cards - the issuers know nothing of). So unless a claim is made and investigated - the issuers have no way of distinguishing those.

For people claiming the OP didn't get the goods - the OP themselves admits that they did. The card was in fact activated with $500 value, the draining occurred after activation (which is the delivery event). Any claim that the card was activated with $0 value is easily refutable, and a chargeback on that claim will not succeed.

As to tampered packaging - that's a valid claim only until the cash register.

While letting CVS know that they have a tampering problem is a good idea, it's not going to bring money back to the OP. They will not file an insurance claim unless they absolutely have to. For that - a police report would need to be made, for starters. Maybe a threat of a lawsuit.

Answer 3

No, you can not dispute the charge.

I'd try going back to that CVS, talking to the manager (who is almost certainly not the criminal, they have too much to lose), letting them know they have a tampering/theft problem, and asking them how they are going to deliver the value you paid for.

They may be willing to trade the tampered-with cards for new ones and make a claim against their insurance. You may need to make a police report before their insurance will cover that, and you should do so anyway.

If the store doesn't offer to fix the problem, tell them you're going to get the local newspaper's ombudsman involved; it they still refuse to make you whole, do so. There may be other resources available in your area to put some pressure on them; the police can probably suggest some of them.

If they still don't budge, I agree that the next step is to contact Vanilla, whoever that is.

If you and the recipients are lucky, have a clean record otherwise, and can show that the cards were used far from anyplace you were, you may get one of these layers to take pity on you, once. If it happens again, they're going to see a pattern and suspect deliberate fraud.

The real answer, I'm afraid, is that these generic stored-value gift cards are much less protected than a normal credit card, and are should be avoided. If you want to send someone a cash gift as a physical token, write a check.

Answer 4

Can I dispute a credit card charge for a hacked Vanilla Visa Gift Card?

You should try, the squeaky wheel usually gets the grease...

If you've been a long-standing customer with your CC then they may sway things in your favor out of courtesy.

Facts:

1. You bought gifts cards on XYZ date
2. The gift cards were spent after XYZ date

At the end of the day, someone has to eat a loss of $2,000 and I can guarantee you none of the parties involved wish to do that.

As of now, the burden-of-proof rests in your lap to prove you did not spend the gift cards yourself and are now trying to make a fraudulent claim/gain.

For proof, go back to that CVS and see if any other cards were tampered with; this assumes they haven't been replaced already. For all you know, the people you complained to are in on the scheme.

Take pictures of the unmonitored location of the gift cards because you may have to write a letter to CVS's corporate headquarters.

Answer 5

If it wears the Visa logo, it has to conform to Visa's standards for refunding fraud claims (chargebacks).

Telling you "3 months" is unacceptable at any level. That is conveniently so far out that 90% of people would forget about it by then, and the 10% who actually follow up could be told "well it's just too late to file a claim now" and other nonsense. So I can see why Vanilla's Indian call center would say that, but it is violating Visa's rules to say so.

5 days is the standard, so you need to talk to Visa the moment you hear this 90 day nonsense. You bought the cards on the strength of their brand. It's absolutely well within Visa's ability to interdict the revenue stream going to Vanilla or Apple or whomever to assure the chargebacks are paid; ask any small Visa merchant who has had chargeback problems.

Pipelining money into other brands of gift cards is a standard money laundering technique, and Vanilla ought to know that, and if they don't they need to eat the losses until they learn it.

Answer 6

You engaged in the purchase with the understanding that you were receiving a secure gift card. If this was not the case, if the gift card was compromised, then you didn't get what you thought you were paying for, and you have a valid chargeback case.

You should ask for Vanilla to refund the money, and if they and CVS refuse (or refuse to do so in reasonable time), you should file a chargeback with Citibank and file a complaint with VISA. If Citibank refuses your chargeback, you should file a complaint with MasterCard.

As for people saying you have the burden of proof, that's not how defective product claims generally work. If you claim that you bought a package of fish sticks, and when you got home it was full of sand, the grocery doesn't get to just say "Well, there's no proof that you didn't eat the fish sticks yourself and then fill the box with sand." If you order a package from Amazon and it never arrives, Amazon doesn't get to just say "Well, maybe you did get it, and you're just trying to scam us out of a refund."

Answer 7

It seems to me that fraudulent and unauthorized activity happened with the Vanilla and Visa are to be complained to, and it's a crime to be reported to police. I would see that as a duty whether or not I got my money back.

I had a hacked card in 2003 and Visa has contacted me and asked me about charges in eastern London, while I was in central London. So, Visa can detect and accept geographical information as an indication of fraud. I was never asked to prove that I had never ridden the ferry to Isle of Dogs, never charged lunch at Burger King, or shopped at World of Leather.

If the fraudulent purchases were in-store, Visa can note the geography and note it doesn't match. If it was so close-by that subterfuge by the card recipient is suspected, store security video can confirm the purchaser wasn't the card recipient, and parking surveillance may note license plates, make of car and the like. I'm sure Visa has arrangements with stores that streamline such a request for data.

If the fraudulent purchases were on-line, again Visa should be able to get the shipping address and hopefully a logged IP address, account# and other information (potentially including all sorts of browser cookies), then further find out from the ISP which physical customer would have originated that data stream. I'm again sure Visa has arrangements with stores that streamline such a request for data.

CVS seems to have given you what you paid for, so I'm not sure CVS or Mastercard would be responsible to make you whole. The theft of information could have happened before the cards got to CVS, or after you bought them. CVS may however have a contract with Visa how such goods are stored and displayed, and if they are in violation of that Visa could have a case with CVS. That said there may be laws in your jurisdiction that help.

I would personally prioritize dealing with Visa, now that Vanilla has given you an untenable timetable. If that gets no traction, then I would check if I could get help from a local newspaper ombudsman and the Consumer Financial Protection Bureau. A lawyer would be my next call as that will also be expensive, on top of being a time sink during your business hours.

Answer 8

I had a similar issue my credit card was not swiping on their system and I called them. Later I came to use it to buy regular stuffs but it would not work. I was shocked to see that it was claimed at Ralphs which I don't know what is. Never buy vanilla gift cards. You will lose money. I have complained to them lets see what happens.