Amid skepticism, Visa International is claiming progress in the battle against credit card counterfeiters.

The San Francisco-based bank card association said its card verification value program, rolled out worldwide in April after a test in Asia, stopped $3.4 million of fraudulent credit card sales in its first two months.

The initiative, known as the CVV program, will prevent $20 million in fraud losses this year, Visa estimated.

Skeptics Have Their Doubts

Visa officials said these statistics represent only a fraction of the actual impact of the program because they include only the transactions being rejected. Additional purchases a criminal might make if his card were not shut off by CVV were not included in the totals, they said.

But skeptics noted that the program addresses only a small corner of the industry's fraud problem. Besides, they said, criminals inevitably adjust to new technology.

Fighting fraud is like punching on a balloon. You push in one place and it pops out someplace else," said Jerome Svigals, an electronic banking consultant in Redwood City, Calif.

Special Number Encoded

The CVV is an individual code number on the magnetic stripe on the back of a card. More than 230 million of the 304 million Visa cards now carry the numbers.

And special terminals enabling merchants to fulfill the CVV requirements have been placed at 10,000 locations such as jewelers, electronics stores, and cash machines, where counterfeiters are considered likely to attempt to use their cards.

"As our member banks all over the world move toward fully electronic payment services, we will see even greater counterfeit reductions," said Robert Heller, president of Visa U.S.A.

MasterCard International has a similar program called CVC, for card verification code.

The code number enables the issuer to verify that the piece of plastic being used in a store is the same one that was issued to the legitimate cardholder.

If not, the transaction is rejected.

Mr. Heller said the program would eventually wipe out counterfeiting.

Visa estimated that its members lost $125 million to counterfeiters last year, or about 2.7 cents per $100 of sales.

Overall, fraud has cost issuers 16 cents for every $100 in sales, with different types of fraud predominating at any given time, said H. Spencer Nilson, who publishes The Nilson Report.

"Fraud as a percent of volume isn't high enough to justify most of the systems being developed to deter it," Mr. Nilson said. "You can't attack it on all fronts at the same time. There's never going to be a point where [the card associations) have control of all types of fraud."

As for CVV and CVC, Mr. Svigals said crooks already may be one step ahead of the game. The systems will stop so-called shoulder surfers and dumpster divers from eavesdropping at checkout counters and sifting through trash for legitimate account numbers and expiration dates to place on fake cards.

But Mr. Svigals said the new systems do not prevent an increasingly popular practice known as skimming. Criminals use easily obtained electronic devices to copy the magnetic stripes -- including the secret code -- from legitimate cards.

In one widely publicized case, he pointed out, skimmers were able to collect electronic stripe information on ATM cards by installing a cash machine fitted with a copying device at a Connecticut mall.

Mr. Heller shrugged off the criticism, saying that with CVV crooks will now have to collude with merchants in order to copy the magnetic stripes. That, he argued, will make it easier to zero in on counterfeiting centers.

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