Sweet crap guys.
Yeah, it is pretty ridiculous.
1) You can login on Vanilla VISA website and see all activity on the card. Pretty easy to prove what happened.
The summary should clear everything up:
Total Holds/Preauths (-) what is this? $2.00
Total Debits(-) $22.76
Total Credits(+) $25.00
Available Gift Card Balance $0.24
Holds/Preauthorizations are transactions that may appear on your account after using your gift card at retail.
These holds will automatically clear from your account once the merchant completes the sale or voids the transaction. Please note that holds may appear on your account for up to 7-10 days. If you swiped at an automated gas pump then the hold will appear for up to 4 days.
2) You must set the zipcode on Vanilla VISA website for online purchases. Likely it is set to seller's zipcode and buyer used the buyer's zipcode in the purchase.
Eeyup, until he gave me his zip code, at which point I started running into other payment processor errors.