Yes it does. It depends on the card issuer. One of my cards Verified by Visa asks for the full password the other asks for random characters.
My biggest gripe with it is that it responds "no that is not your password", you shout at it "yes it is". Select change password; Answer some staggeringly easy questions (you know, like mother's maiden name and postcode) and set your new password and it says "you've used that one before you can't have it" - at which point you punch the screen shouting "that's the bloody one I was entering before". You just end up in a loop resetting your password every single time you're forced to use it.
Verified by Visa is just the banks attempting to offload their fraud liabilities on to the retailer.