How does the CVC help prevent fraud?

The Card Verification Code (CVC) plays a significant role in preventing fraud during electronic transactions. Its primary purpose is to serve as a security feature that provides extra protection against unauthorized use of a card. The CVC is typically a three- or four-digit number located on the back or front of a payment card.

When it comes to fraud prevention, the characteristic that makes the CVC particularly effective is that it cannot be viewed or copied by card skimmers. Card skimmers are devices used by criminals to capture information from a payment card's magnetic stripe, often in a covert manner. However, the CVC is not encoded on the magnetic stripe itself, which means that even if a skimmer obtains the card's primary account number, the CVC remains inaccessible. This restricts the skimmer's ability to process unauthorized transactions online or over the phone, where the CVC is typically required in addition to the card number.

Understanding this, it's clear how the CVC safeguards against fraud by ensuring that only those who physically possess the card can provide the authentication needed for certain transactions, thereby acting as a deterrent against unauthorized use.