The top regulation for CVV fraud is 18 U.S.C. § 1029, the federal access device fraud statute, judged by its direct coverage of card verification values, nationwide enforcement, and felony penalties. Other key rules include federal wire fraud, state identity theft laws, and PCI DSS. This guide explains each.
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Federal Laws That Cover CVV Fraud
Federal prosecutors use several statutes to charge CVV fraud. The most direct is 18 U.S.C. § 1029, which criminalizes the unauthorized use, production, or trafficking of access devices. A CVV is an access device under the law. Penalties can reach 10 years in prison, or 15 years for certain aggravated offenses.
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Other federal tools include:
- 18 U.S.C. § 1343 (Wire Fraud): Covers schemes to defraud using interstate wires, including online card-not-present transactions. Maximum penalty is 20 years.
- 18 U.S.C. § 1028 (Identity Theft): Applies when a CVV is used with other stolen personal data. Penalties can reach 15 years.
- 18 U.S.C. § 1028A (Aggravated Identity Theft): Adds a mandatory two-year consecutive sentence for certain identity theft crimes.
State-Level Regulations
States also prosecute CVV fraud under identity theft, computer fraud, and credit card abuse laws. Examples include California Penal Code § 502 (computer access fraud), New York Penal Law § 155.30 (grand larceny), and Texas Penal Code § 32.51 (fraudulent use of identifying information). Penalties vary by state and often include restitution and felony charges.
PCI DSS and Card Network Rules
The Payment Card Industry Data Security Standard (PCI DSS) is a contractual requirement for merchants and service providers that store, process, or transmit cardholder data. PCI DSS mandates encryption, access controls, and regular testing. Card networks like Visa and Mastercard enforce PCI DSS through fines and increased transaction fees. Non-compliance can also lead to loss of the ability to accept card payments.
Penalties and Enforcement
Enforcement is shared by the FBI, Secret Service, U.S. Postal Inspection Service, and state attorneys general. Penalties can include prison time, fines, restitution, and forfeiture of assets. Civil actions under the FTC Act Section 5 can target businesses that fail to protect card data.
What Merchants and Consumers Should Know
Merchants should use tokenization, CVV verification, and address verification systems (AVS) to reduce risk. Consumers should monitor statements and report unauthorized charges promptly. Under the Fair Credit Billing Act, consumers have limited liability for unauthorized card use if reported quickly.
Key Takeaways
- CVV fraud is primarily prosecuted under 18 U.S.C. § 1029 and § 1343.
- State identity theft laws add separate charges and penalties.
- PCI DSS is a contractual standard, not a law, but it is enforced by card networks.
- Penalties include prison, fines, restitution, and asset forfeiture.