Abstract Identity theft is a very scary and real threat to everyone. In an attempt to give people peace of mind a new algorithm of mitigating risk is presented, the Secure Online Transaction Algorithm (SOTA). The proposed SOTA seeks to use two-factor authentication with the random codes. This form of user authentication has become widely accepted and many companies have started to implement this security feature. This can be utilized to identify users and establish secure way of purchasing items online. The proposed SOTA uses mobile devices to log into card accounts via an application to view the randomly generated code. This is then inputted on an online retailer’s website when prompted in order to authenticate the individual making the purchase. This minimizes the possibility that an illegitimate user can use someone else’s information to make fraudulent purchases. Without a valid code, identity thieves cannot use the stolen card information to make purchases. This in turns protects both the consumer and the credit card companies, which could be harmed financially. In order to better understand how our model could protect someone from having a stolen credit card used, we provide one case study to showcase the security.