What is a validation code?
A credit card’s front or back has three or four digits known as a validation code, often called a CVV, CV2, or CVV2 code. Its goal is to provide extra protection for credit card transactions made over the phone or online.
Validation codes are often located on the far right side of the signature panel on the back of credit card cards. However, the validation code appears on the front of American Express (AXP) cards.
How Validation Codes Work
The risk of identity theft and other credit card fraud has worsened as online shopping becomes increasingly popular. Using validation codes while using credit cards is one step to reducing this danger.
A customer’s name, billing address, card number, expiration date, and validation code are often required during a transaction. Even though much of this information, such as the name and address, is available elsewhere, you can only access the card number, expiration date, and validation code by physically holding the card. As an extra precaution, the validation code is often placed on the back of the card, which makes it more difficult for potential thieves to extract all the relevant data from a single credit card snapshot.
Consumer protection rules forbid merchants from keeping customers’ validation codes after completing a transaction. However, dishonest sellers may still unlawfully record this information. This serves to strengthen security measures further. The personal identification numbers (PINs) that cardholders must input while using point-of-sale (POS) terminals to make payments provide an extra layer of security.
An Actual Validation Code Example
Security precautions like the validation code make it harder to steal credit cards or conduct identity theft, but they won’t stop a determined enough crook from stealing. Credit card theft has increased recently, topping 393,207 occurrences recorded in 2020. The United States accounts for over 34% of instances worldwide, making it the most severely impacted nation.
The restriction on merchants storing card security codes after a customer completes a transaction adds a layer of security against credit card fraud. However, cardholders should safeguard their validation code in the same way as they would their card number and expiration date, since validation codes are susceptible to theft. The validation code is critical information that might let fraudsters use someone else’s card for fraudulent purchases. The Fair Credit Billing Act (FCBA) limits the cardholder’s responsibility if a thief uses a stolen card to $50, depending on when the crime is notified. Consumers should immediately contact their credit card provider to report an issue and warn them of a potential fraud case if they discover their card is stolen or notice any strange or illegal transactions or other activity. The card issuer may then cancel or deactivate the card.
Conclusion
- One of the security methods used to lower credit card fraud is a validation code.
- It is a four- or three-letter code printed on the front or back of a credit card.
- According to the most recent Nilson Report, credit card fraud has increased, with losses from crime expected to reach over $38 billion by 2027, up from roughly $29 billion in 2019. The United States accounted for almost 34% of the recently recorded losses.
