There is so much speculation going around in this thread so let me add my own two cents
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Target rolled out the pre-paid Redcard to only a limited number of States or geographic areas. Why would they do that? Why limit it? I think I saw somewhere up in this thread that is a trial or a pilot project or something. So obviously they want to control that so they can learn whatever it is they are hoping to learn before going forward (or pulling the plug as the case may be). To me that scenario could explain why some places get free activation and some have to pay $5. And it certainly could explain why they would clamp down on people trying to activate bootlegged cards in areas that are not supposed to have them yet.
I don't see this as any reason to go running around, like chicken little, shreying that "the sky is falling" or anything like that. It's just bad for the people in NY, NJ, CA, etc that don't get to have it (yet). But, on the other hand, once it does get released in NY and those other places, well, that will probably kill it for all of us anyway.