A shutdown would be the biggest risk of any legal action. Are there any examples of Walmart blacking people from using Vanilla Visas other than for bill pay, money orders or loading prepaids? If not, all I see a lawsuit doing is shining a big light on MS. Just like the Mint, once enough attention is put on the activity it will be shutdown. Do not forget that technically many cardholder agreements state that rewards are not earned on purchases of cash equivalents(i.e. gift cards).

Lobachevsky does bring up a good point though about these cards being advertised to be accepted anywhere visa is accepted and stores put those Visa, etc accepted here stickers in their stores so that would seem to indicate a representation not only by bank but the merchant to the customer. It is one thing to block all credit card payments for a product but blocking payment by a particular issuer seems questionable. I have no idea. I am not a lawyer but I just do not think going to court to test this out is a good idea. Not unless it can be done without using MS activities as the basis of the lawsuit(and assuming there is any legal basis to any of this to begin with).