Deck 15: Consumer Fraud

Question 1

Which act limits consumers' liability for fraudulent credit card charges?

A) Identity Theft and Assumption Deterrence Act
B) Fair Credit Billing Act
C) Family Education Rights and Privacy Act
D) Fair Credit Reporting Act

Answer 1

B

Question 2

Which of the following statements correctly describes consumer fraud?

A) Any fraud that is committed by a consumer
B) Any fraud that targets individuals as victims
C) Any fraud that is committed against an organization
D) Any fraud that is instigated from a separate country

Answer 2

B

Question 3

How do fraudsters use "cookie" type software?

A) To automatically remove web histories after one closes the web browser
B) To initiate pop-ups to unknown sites to gather valuable consumer information
C) To show the status of a Web site to be secure
D) To gather personal and confidential information from consumers' hard drives

Answer 3

D

Question 4

Which of the following identity theft actions listed is part of the trial stage, first dimensional actions?

A) Efforts to gain victim's personal information
B) Larger thefts, often involving personal interaction, without much chance of getting caught
C) Largest thefts committed after perpetrators have confidence that their schemes are working
D) Small thefts to test the stolen information

Question 5

A fraudster changes the physical address or e-mail of the victim so that credit card statements are sent by the financial institution to the perpetrator rather than the victim. Which stage of the identity theft cycle is being discussed here?

A) Verification stage
B) Trial stage
C) Discovery stage
D) Action stage

Question 6

Which stage is considered to be the most critical stage of the identity theft cycle?

A) Action stage
B) Trial stage
C) Discovery stage
D) Cover-up stage

Question 7

Which of the following is NOT an action to minimize your risk of identity theft?

A) Opting out of pre-approved credit cards
B) Shredding mail that contains detailed information
C) Using strong passwords and changing them often
D) Using Social Security number on visiting cards

Question 8

Which of the following is NOT a symptom of potential investment scams?

A) Pressures to get in early on the investment
B) A business with a history of bankruptcy or scandals
C) Use of a special tax loophole or a tax avoidance scheme
D) Promise of returns comparable to those of treasury bonds

Question 9

Which trial stage dimensional actions are the riskiest for the identity thief?

A) Third dimensional actions
B) Second dimensional actions
C) First dimensional actions
D) Fourth dimensional actions

Question 10

TransUnion, Equifax, and Experian are examples of what type of agencies?

A) Identity theft investigation agencies
B) Credit reporting agencies
C) Money transfer agencies
D) Credit billing agencies

Question 11

Which of the following involves the use of the Internet to steal important information?

A) Shoulder surfing
B) Phishing
C) Skimming a credit card
D) Dumpster diving

Question 12

Which is the primary agency responsible for helping victims of identity theft?

A) Social Security Office
B) Federal Bureau of Investigation
C) Permits Department
D) Federal Trade Commission

Question 13

Which act gives individuals the right to opt out of having their information sold?

A) Identity Theft and Assumption Deterrence Act
B) Family Education Rights and Privacy Act
C) Gramm-Leach-Bliley Act
D) Fair Credit Reporting Act

Question 14

Which act makes it illegal for any agency that receives federal funding to disclose privacy information about individuals?

A) Identity Theft and Assumption Deterrence Act
B) Family Education Rights and Privacy Act of 1974
C) Gramm-Leach-Bliley Act
D) Fair Credit Reporting Act

Question 15

Which of the following statements defines shoulder surfing?

A) Criminals physically confront consumers forcing them to reveal their valuable information.
B) Criminals follow consumers to discover their buying habits.
C) Criminals sneak into victims' homes and steal their information.
D) Criminals watch consumers from a nearby location as they give credit card information over the phone.

Question 16

According to the Federal Trade Commission, what is the most common type of consumer fraud?

A) Identity theft
B) Ponzi scheme
C) Magazine fraud
D) Telephone fraud

Question 17

Which of the following is NOT a common identity theft method?

A) Filing for bankruptcy under the victim's name
B) Opening new bank accounts in the victim's name
C) Changing a victim's mailing address
D) Destroying personal property, such as a home or car

Question 18

Which of the following is a true statement regarding the Gramm-Leach-Bliley Act?

A) The act gives financial institutions the right to share personal information for a profit.
B) The act expressly requires financial institutions to protect against identity theft.
C) The act allows financial institutions to share personal information, as long as it is not for a profit.
D) The act protects confidentiality of customer information.

Question 19

What is the term for when fraudsters contact potential identity theft victims and act as a representative of a business to verify previously gathered information?

A) Trashing
B) Pretexting
C) Mail stuffing
D) Skimming

Question 20

Which of these is a second dimensional action in the trial stage of the identity theft?

A) Larger thefts, often involving personal interaction, without much chance of getting caught
B) Smallest thefts that lay down a solid foundation for the perpetrator to commit identity theft
C) Largest thefts committed after perpetrators have confidence that their schemes are working
D) Small thefts to test the stolen information

Question 21

Which of the following is a variation of fraudulent MLMs, in which an organization sells illusionary products and profits, instead of real products?

A) Ponzi scheme
B) Foreign advance scheme
C) Identity theft scheme
D) Shoulder surfing scheme

Question 22

Which of the following is a hi-tech method by which thieves capture personal or account information from a credit card, driver's license, or even a passport?

A) Surfing
B) Skimming
C) Clawbacks
D) Phishing

Question 23

Which of the following observations is NOT true of foreign-advance fee scams?

A) Perpetrators are well-known businesses and there is usually some urgency to participate.
B) Perpetrators claim to trust the victim with their money or assets.
C) Perpetrators are always willing to transfer money or other assets to the victims, but only after money or information is extracted.
D) Perpetrators claim to have access to large sums of money or assets.

Question 24

Which of the following is the term for a fraudulent process whereby even representatives of legitimate MLMs are required to buy large, expensive amounts of inventory.

A) Forward pricing
B) Snake oil
C) Front loading
D) Opportunity meeting

Question 25

Which of the following is a scam in which consumers respond to an advertisement that promises income simply for filling envelopes?

A) Craft assembly
B) Bogus mystery shopping
C) Mail stuffing
D) Skimming

Question 26

Identify the complaint database developed by the U.S. Federal Trade Commission.

A) Consumer Watch
B) Fraud Watchdog
C) Consumer Sentinel
D) Identity Theft Assistance

Question 27

What is one of the biggest marketing campaigns of illegal MLMs?

A) Promise of full-time work from home for huge weekly earnings
B) Absence of headhunter fees
C) A mysterious "benefactor" interested in contributing a large sum of money
D) Promise that investors will always make money from future downline growth

Question 28

Product testing is a fraud:

A) that requests consumers to review the products presented in the brochures and send their commentaries to the supplier for review.
B) where consumers respond to an advertisement that promises income simply for stuffing envelopes.
C) that promise victims a job that involves strolling through stores, enjoying the displays, shopping for merchandise, and then filing reports on the experiences they have had.
D) where perpetrators promise high pay for working on different projects.

Question 29

A Nigerian money offer e-mail is a form of which of the following scams?

A) Foreign advance-fee scam
B) Purchase of real estate scam
C) Clearinghouse scam
D) Multilevel marketing scam

Question 30

Which federal statute protects the privacy and confidentiality of patient information?

A) Family Educational Rights and Privacy Act
B) Identity Theft and Assumption Deterrence Act
C) Gramm-Leach-Bliley Act
D) Health Information Portability and Accountability Act

Question 31

Which of the following is a scam where perpetrators promise high pay for working on different projects like wooden calendars, paper towel holders, hair clips, or holiday decorations?

A) Product testing
B) Mail stuffing
C) Craft assembly
D) Skimming

Question 32

What is dumpster diving?

A) An activity where fraudsters use an information storage device to gain access to valuable information
B) An activity where a perpetrator will try to build a relationship of confidence with the victim
C) An activity where criminals watch consumers from a nearby location as they give credit card or other valuable information
D) An activity where fraudsters rummage through consumers' trash

Question 33

What is the most detrimental consequence of identity theft?

A) The loss of physical assets
B) The loss of credit and reputation, as well as introduction of erroneous information that is difficult to fix
C) Time lost in reporting the fraud
D) The actual loss of money

Question 34

Accumulating documentation belongs to which stage of the identity theft cycle?

A) Action stage
B) Discovery stage
C) Trial stage
D) Concealment stage

Question 35

Once a fraudster has gained confidence that the identity theft is working, he or she often takes out a loan using the victim's identity. The most common type of fraudulent loan is for which of the following items?

A) Foreign travel
B) Purchasing real estate
C) Education
D) An automobile

Question 36

Which of the following is not a characteristic of a Nigerian money offer scam?

A) States the need for urgent assistance
B) Makes the victim feel like he or she is the only recipient of the special opportunity
C) Involves someone trying to sell a piece of prime African real estate
D) The e-mail is the promise of money and asks for help

Question 37

A clearinghouse scam involves a victim receiving:

A) a letter that claims he or she has inherited a significant amount of money.
B) mail from a known party who claims to have access to large sums of money or assets.
C) a letter that falsely claims the writer represents a foreign bank.
D) an email containing their Social Security number and/or credit information.

Question 38

Snake oil plans are plans that:

A) make their money by getting new people to buy property in exotic locations.
B) promise enormous earnings or claim to sell miracle products.
C) motivate the purchase of unusually overpriced goods or services.
D) make people believe that they will make money simply because they are one of the earliest investors.

Question 39

All of the following are types of foreign advance schemes, EXCEPT:

A) disbursement of money from wills.
B) multi-level marketing scams.
C) sale of crude oil below market price.
D) purchase of real estate scam.

Question 40

What makes telemarketing fraud more effective than Internet or mail-based approaches?

A) Reduced transaction costs
B) Opportunity to speak with a person directly
C) Increased size of the fraud
D) Absence of government regulations

Question 41

Which of the following was the top consumer fraud in number of victims identified in the U.S. Federal Trade Commission report?

A) Unauthorized billing-Internet services
B) Advance fee loan scams
C) Fraudulent weight-loss products
D) Work-at-home programs

Question 42

According to the text, which of the following is the best defense against becoming a victim of consumer fraud?

A) Avoid Internet offers
B) Register on the do-not call list
C) Check companies named in all print ads through the Better Business Bureau
D) Education

Question 43

What percent of the population was estimated to have been victims of fraud in 2011?

A) 8.5%
B) 10.8%
C) 22.8%
D) 31.5%