Merchants who process card-not-present transactions, such as mail orders, telephone
orders and Internet orders, do not have the ability to confirm the cardholder's
signature. To protect themselves, they use the Address Verification Service (AVS).
This service remains useful, but is limited in the anonymous environment of the
Internet and mail/telephone orders.
AVS works by comparing the billing address (street address and zip code) information
supplied by the cardholder, against information on file with the card issuing bank's
database. The AVS response code corresponds to different degrees of match when the
address and zip code information is compared against the database. The service is
only available for U.S. street addresses.
AVS is subject to inherent limitations including 1) the potential for the issuer's
database to contain errors or missing information, or 2) in the case of stolen wallets,
purses or phone scams, thieves can have knowledge of both the credit card and billing
address.
AVS alone is not enough to protect the merchant from a fraudulent transaction.
Learn more about AVS.