I think this is some kind of kludge on the backend for Chase's security system where something trips in their fraud-detection system and that's the error message returned to the processor.

I've gotten declines that Chase claims were "incorrect CVV" in exactly the same situation--card stored with a merchant I've done business with countless times in the past, and I know the CVV is correct because the card is in my hand. I've even gotten that excuse a couple times when using the card in person. The security folks didn't have a good answer as to how I could have a decline for incorrect CVV when buying gas or groceries with the card, but that's what the system shows them.

I've always gotten these accompanied by a call or e-mail asking me to call in and verify previous transactions, though, and the charges go through after talking to Chase to confirm that yes, the person who attempted to buy gas 5 minutes from my house was me.