Hi I'm John Ulzheimer, a credit expert who
contributes to Credit Card Insider.com. Today's question is this:
What is a CVV number and what is the purpose
of a CVV number? So first off let's define
CVV number. On every credit or debit card is a series of digits
called the CVV number. CVV number
stands for card verification value. CVV numbers are also commonly referred to as
CSC numbers,
or Card Security Codes. CVVs are
three digits on Visa, MasterCard, and Discover branded credit cards
and CVV's are four digits on American Express branded credit cards.
The card is embossed on either the front or the back
of a credit card along with the account number. So,
for this particular card, this is a Discover card, let me show you
the CVV number. So if you can see right there
at the very end of the series of digits on the back of the card you'll see the number
281. That is the CVV
number on this particular card. The CVV is supposed to be
a fraud prevention tool for what's referred to as card-not-present transactions
mostly online transactions where you're not actually
physically standing in a merchant's store
where you can actually hand them a card and they can verify the information on the card
and also ask you to provide some sort of ID
proving you are the person whose name is on the card and whose signature
appears on the back of a card. And while it is an effective way to protect you
from
from credit card fraud it is not a fool-proof
way to protect you from credit card fraud because
the CVV number is only important in card-not-present transactions. So if I where able to get
the information from this card off of a magnetic stripe, which includes the
account number,
then I can actually clone a card and then use it physically
in a store, fraudulently, because it's unlikely that they're gonna ask me to provide
that three-digit CVV
number from the back. These security codes are not new.
They've been used in the United States for over fifteen years
but still credit card fraud is very very problematic. Thankfully we have
the protections
of the Fair Credit Billing Act, which is the federal law
that caps your liability on credit card fraud
to no more than fifty dollars. And all four of the major credit card issuing networks,
Visa, MasterCard,
American Express, and Discover, have zero-fraud policies on top of the protections
that we enjoy because the Fair Credit Billing act. So really,
if someone were to steal this card, and go to a merchant
somewhere and charge five hundred dollars of stuff, then my liability would be zero.
So while the CVV is somewhat of an effective way to prevent fraud,
I actually enjoy more protections not only because of federal law but because
of also the policies of the major credit card issuing networks.
Now, when it comes to these security digits on your card,
there are some people who believe that they're actually going to go away.
What you may have heard recently is this
movement away from this magnetic stripe type of technology, more so
to what's referred to as Chip-and-PIN, which essentially is a credit card instead of
having a number printed on the front of it
and then embedded on a magnetic strip on the back of it, there's actually going to be a microchip
inside the card that's going to contain all the account information,
and you're actually going to have to have a PIN, or personal identification number,
that you're going to have to enter at the point-of-sale transaction in order for
the card to be able to be used. So at that point there really is no need for this
three digit number on the back, because the
PIN is going to take the place of that number. But that's still several years away,
so the next time you pull a card out of your wallet, look on the front,
or look on the back, and see if you can locate your CVV number.
If you have any questions pertaining to credit or any other financial topics,
please submit them to Credit Card Insider.com. Thanks for watching,
have a great day.