NEW YORK (Reuters) -Visa defeated a proposed class action lawsuit on Monday by consumers who accused the world's largest card payments network of failing to warn that its prepaid "Vanilla" gift cards were susceptible to being drained by thieves.

U.S. District Judge Gregory Woods in Manhattan said it was unreasonable for consumers to consider gift cards impervious to scams, or that Visa's logo amounted to a promise that no scams would occur and the company would help victims.

Woods also rejected a claim that Visa provided inadequate warnings on the cards' packaging about possible tampering, citing news coverage of "card draining" and comments in online forums about Visa Vanilla scams.

"No reasonable consumer would expect the allegedly 'widespread' practice of third-party scams affecting prepaid cards to somehow not affect one of the industry's major suppliers," the judge wrote.

The lead plaintiff, Ira Schuman, of Scarsdale, New York, sued Visa and two Vanilla card issuers in January 2024, after learning that eight $500 cards he bought as holiday gifts for employees in 2022 and 2023 had been emptied.

He said non-reloadable Vanilla cards sold at CVS, Target, Walgreens and other retailers came in thin cardboard sleeves that thieves could open and reseal, without being detected, after recording account information.

Lawyers for Schuman did not immediately respond to requests for comment. Visa, based in San Francisco, and its lawyers did not immediately respond to similar requests.

The lawsuit sought damages for purchasers of Visa-branded Vanilla cards in New York for alleged violations of the state's consumer protection laws.

The case is Schuman v Visa USA Inc et al, U.S. District Court, Southern District of New York, No. 24-00666.