Secure Online Account Numbers, the Discover Card program that gave users a unique credit card number for each online purchase, is about to be a thing of the past. The company announced recently via an email to cardholders that it would discontinue the program on Sep. 8.
As reported by The Chicago Tribune and The Consumerist, the reason Discover gave for the product's demise is the company has "added security measures to protect customers from fraudulent use of their cards both online and offline" which negates the need for the disposable credit card numbers. The Consumerist requested comment from Discover but none was given.
Using unique numbers for each transaction was pioneered by American Express in 2000 with the advent of its Private Payments program; Discover followed suit, as did Citibank and MBNA and others. American Express cancelled its program in 2004, MBNA (now part of Bank of America) still has its ShopSafe program and Citi still offers its Virtual Account Number program.
Credit card fraud and identity fraud decreased in 2010, according to Javelin Strategy & Research, but despite annual costs dropping to $37 billion from $56 billion, consumer costs increased 63 percent to $631 per incident in 2010 from $387 in 2009. Javelin also notes that cases of new account fraud rose, but existing card fraud amounts declined to $14 billion from $23 billion in 2009. The report notes that the reasons for the declines include increased consumer awareness but also the use of increased security and verification measures by credit card companies.
Discover noted in its email that its cardholders are never liable for unauthorized purchases, and most credit card agreements provide fraud protection. The amount cardholders can be held liable for varies from card to card.