how validation codes work
as online shopping continues to grow in popularity the threat of identity theft and other forms of credit card fraud has become increasingly severe one measure taken to try to mitigate this risk is the use of validation codes when making credit card purchases in a typical transaction a customer will be asked to provide their name billing address card number expiration date and validation code although many of these details such as the name and address could be obtained from other sources the card number expiration date and validation code can theoretically only be obtained from possessing the card itself as an added measure the validation code is generally printed on the back of the card making it more difficult for would be thieves to glean all the necessary information from a single photograph of the credit card to process the credit card transaction and verify the identity of the user the entered cvv is compared against the card number to further enhance these security measures consumer protection laws prevent merchants from storing customers validation codes after a purchase has been made although unscrupulous sellers may still record this information illegally an additional measure of protection is provided by the personal identification numbers pins that cardholders must enter when making payments using point of sale pos terminals real world example of a validation codealthough security measures such as the validation code raise the difficulty of committing identity theft or making purchases using a stolen credit card they are unlikely to deter a sufficiently motivated thief in practice credit card fraud has continued to climb in recent years surpassing 393 207 reported cases in 2020 3 the united states is by far the most acutely affected country representing nearly 34 of global cases 2merchants are not allowed to store card security codes after a customer makes a purchase which provides extra protection against credit card theft still validation codes can be stolen and cardholders should protect their card s validation code just as they would protect the card number and expiration date the validation code is a key piece of data that can enable thieves to make fraudulent transactions with someone else s card however if a thief does use a stolen card the cardholder s liability is limited to 50 under the fair credit billing act fcba depending on when the theft is reported customers who realize their card is missing or detect suspicious or unauthorized purchases or other activity should contact their credit card issuer immediately to report the problem and alert them to a possible case of fraud the card issuer can then cancel or deactivate the card 4