What Is a Validation Code?
Let me explain what a validation code is—it's also called a CVV, CV2, or CVV2 code, and it's a series of three or four numbers you'll find on the front or back of your credit card. This code adds an extra layer of security for transactions you make online or over the phone.
Most credit card issuers put their validation codes on the back of the card, right on the far-right side of the signature panel. But if you have an American Express card, look for it on the front instead.
Key Takeaways
- A validation code is one of the security measures deployed to reduce credit card fraud.
- It consists of a three or four-letter code printed on the front or back of a credit card.
- According to the latest Nilson Report, instances of credit card fraud have continued to rise, reaching nearly $29 billion in 2019 and projected to rise to around $38 billion by 2027, with the United States accounting for a significant portion of the most recently reported losses, at nearly 34%.
How Validation Codes Work
As online shopping keeps growing, so does the risk of identity theft and credit card fraud, and validation codes are one way to help counter that. When you make a purchase, you'll need to provide your name, billing address, card number, expiration date, and the validation code.
While someone might get your name and address from elsewhere, the card number, expiration date, and validation code should only come from having the physical card. Printing the code on the back makes it harder for thieves to get everything from just one photo of the front.
To verify you, the system compares the CVV you enter against the card number. For more security, laws stop merchants from keeping your validation code after the purchase, though some might do it illegally anyway. And don't forget, PINs at point-of-sale terminals add another layer when you're paying in person.
Real-World Example of a Validation Code
Security like validation codes makes it tougher for thieves to commit identity theft or use stolen cards, but a determined criminal might still find a way. In reality, credit card fraud keeps climbing, with over 393,207 cases reported in 2020, and the US makes up nearly 34% of global incidents.
Merchants can't store your card security codes after you buy something, which helps protect against theft. Still, you need to guard your validation code just like your card number and expiration date—it's key info that thieves could use for fraud.
If a thief does use your stolen card, your liability is capped at $50 under the Fair Credit Billing Act, as long as you report it in time. If you notice your card is missing or see suspicious charges, contact your issuer right away to report it and get the card canceled or deactivated.
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