Harry Gross: Code on back of credit card has a purpose

DEAR HARRY: I had never used my computer to buy merchandise on the Internet, so I'm not sure I did the right thing. I went to a site that I know is legitimate and ordered about $150 worth of Christmas gifts. I played it safe and gave them my credit-card number over the phone rather than send it on the computer. However, the lady I spoke with asked for the three-digit code that appears on the back of the card. I saw no reason not to give it to her, but I am curious as to just what it's for.

WHAT HARRY SAYS: They call this a "security code." Those on the other end of the transaction are not permitted to store this code, but they use it in telephone and Internet purchases. It's a method of verifying that you have the actual card and not just the numbers or a photocopy of the front of the card. There are no numbers available to indicate how well this works, but we do know that it does help to avoid fraud. A while ago, I decided to test it. When asked for that code, I deliberately transposed two of the numbers (I said 123 instead of 132). The guy on the other end of the telephone line asked me to repeat it and then said he was canceling the transaction because it was wrong. We did get the transaction straightened out after some further talk. Incidentally, American Express has a four-digit code on the front of its cards.