Seems like this could be fixed with a blacklist that was downloaded to the terminals periodically.
Yeah but we have chip and pin and NFC now, so it's an active protocol between card and reader
That was also an old exploit on the GTE Airfone systems on aircraft of the same vintage. It didn't do credit verification in air, and accepted any expired calling or credit card and gave you phree phone calls at 35,000 feet. Only when the plane landed and the data downloaded did GTE find out they got stiffed. ;)
One of my so-called friends just carried around an expired credit card, and rode the bus with impunity. The fare box accepted anything that seemed legit. So it's reasonable to see why that sort of payment method was discontinued with prejudice.
(Of course there's no reason not to bring it back with connectivity improvements, but they'd rather push mobile fares at the expense of something actually convenient to people in the economic bracket of "transit rider".)