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Fraud Exam 4
Final
| Question | Answer |
|---|---|
| Why is it important to study consumer fraud? | practically all of us at one time or another will face some type of consumer fraud. It is important that we learn to be skeptical so that we don’t become victims |
| What is identity theft? | assumption of one person’s identity by another person. Identity theft occurs when someone uses information to pose as another person in order to obtain personal gains |
| What are some methods perpetrators use to steal a person's identity? | Common methods include filling out a preapproved credit card application, searching through a victim’s trash, stealing from a victim’s mailbox, and gaining a victim’s personal information via the Internet. |
| What are some proactive steps that consumers can take to minimize their risk to identity theft? | shredding important documents, depositing valuable mail information directly at an official post office drop box, opting out of preapproved credit cards, and registering on the national do-not-call register |
| What are some examples of foreign advance-fee scams? | via mail, Internet, phone, or fax that invite individuals to participate in transferring money from an individual’s domestic country to a foreign country. |
| What is Nigerian money offer? | letter or e-mail that invites you to share in the transfer of wealth from Nigeria or some other (usually) African country to the United States or elsewhere. |
| What is the difference between a fraudulent multi-level marketing organization and a legitimate multilevel marketing organization? | legitimate organizations focus on selling a product while fraudulent multilevel marketing schemes usually do not involve the selling of a product. |
| How does consumer fraud affect the economies of entire countries? | foreign investors are hesitant to invest in the country; citizens are defrauded out of savings; and havoc and chaos can result. Fraud of any type cripples economics and slows down their growth. |
| Why are the elderly and/or uneducated so susceptible to fraud? | elderly and uneducated because these individuals are less likely to suspect fraud. The elderly and uneducated are less informed and much more likely to have confidence in fraudulent scams than others. |
| What are investment scams? | worthless investments being sold to unsuspecting investors. Examples include worthless stock, worthless real estate, or other sham investment opportunities. |
| How does the expression "If it sounds too good to be true, it probably is" relate to consumer fraud? | consumer frauds are centered around deals that seem too good to be true; they promise a good deal, high returns with no risk, or something that is not ordinarily available to the public |
| While consumer fraud often affects individual people directly, in what ways does consumer fraud affect everyone? | businesses lose billions of dollars a year to fraud of all kinds of consumer fraud, many having to do with stolen checks and credit cards. These businesses pass on the loss of fraud to consumers. They also spend a great deal of money on fraud preventio |
| After working out at the gym, you notice that your car has been broken into and your wallet has been stolen. What should you do? | Quickly call your credit card companies and cancel your credit cards, cancel any debit cards and put a stop on any checks you had in your wallet. The sooner you act, the less risk you face. |
| Phishing is the method of: | Using e-mail or other Internet applications to deceive people into disclosing valuable personal information. |
| Multilevel marketing companies: | Increases their distribution process by recruiting additional company sales representatives. |
| In order to protect yourself from identity theft, you should: | Always shed receipts, credit card offers, doctor's bills, insurance information, or any other documents the contain sensitive personal information. |
| The Gramm-Leach-Bliley Act gives you the right to: | Opt out of having your personal information sold to organizations. |
| If you become victim of identity theft, you should first: | Contact the federal trade commission for assistance and advice. |
| Which of the following is a common characteristic of fraudulent money offer letters? | All of the above. |
| The major reason the elderly people are so susceptible to telemarketing fraud is that they: | Are often lonely and enjoy talking to friendly callers. |
| Consumers should provide credit card numbers or bank account information over the telephone only when: | They initiated the call and are purchasing a legitimate product. |
| What is the best defense against consumer fraud? | Educating yourself about credit card risks. |
| What does "https" stand for? | Hypertext transfer protocol (secure) |
| What federal statue requires that credit reports can only be obtained for legitimate business needs? | Title 15 U.S. Code $1681 |
| Which of the following is not listed in the chapter as a common characteristic of Nigerian scam letters? | Picture of the perpetrator to assure victims |
| Which of the following institutions would not be very helpful to call in the event of identity theft? | The local chamber of commerance |
| What is one way to determine if a Web site is secure or not? | Look for an "s" after the "http" in the URL of the Web site. |
| The most susceptible to consumer fraud are often: | Uneducated or elderly |
| Why is fraud so prevalent in bankruptcy and divorce cases? | , assets are taken away from someone or an organization and given to someone else. In bankruptcy cases, the assets taken are given to creditors. In divorces, assets taken are given to spouses and attorneys representing spouses. |
| What is bankruptcy? What are the most common types of bankruptcy? | Bankruptcy is the legal process that allows a debtor to work out an orderly plan to either settle debts or liquidate assets and distribute them to creditors,chapters 7, 11, and 13 |
| What are some of the more relevant sections of the Bankruptcy Code related to fraud? | Under Chapter 11, creditors must give the organization more time until it can reorganize its operational and financial affairs. Under Chapter 13, individuals are allowed to make payments to creditors over a specified number of years. |
| What is tax fraud? | intentional underpaying of taxes. |
| When bankruptcy takes place, who are the major participants involved? | trustees, the examiners, the debtors, the creditors, and the adjusters |
| What are some of the most common bankruptcy fraud schemes? | petition mills, multiple filing, false statements, trustee fraud, attorney fraud, forged filings, embezzlement, credit card fraud, and bust-outs. After the concealment-of-assets fraud schemes, petition mills. |
| What are some of the most common divorce fraud schemes? | deliberately and intentionally hiding assets from the other party |
| What are some of the most common tax fraud schemes? | not reporting income that should be taxed and deliberately overstating (without basis) tax deductions and exemptions. Examples of these types of fraud include using a false Social Security number, keeping two sets of financial books, hiding income, |
| What are some of the most common ways that fraud perpetrators conceal and transfer assets or income during bankruptcy and divorces? | conceal and transfer assets to keep assets from being taken. To this end, individuals often attempt to hide or transfer assets fraudulently so that they cannot be known or discovered |
| What is court-appointed or panel trustee? | such as accountants or lawyers, who identify and collect a debtor’s assets and then allocate those assets to creditors in an orderly manner. |
| What is an affidavit of proposed investigator? | legal document that allows a CFE, CPA, or other professional independent of the court to investigate allegations of bankruptcy fraud. The affidavit is sworn under oath and notorized |
| Who usually initiates the filling of an application for retention of an investigator? | Creditors initiate the filing of an application for retention of investigator |
| Why would fraud investigators involved in bankruptcy or divorce cases be careful about what they put in their report. | reports are submitted they become legal documents of the court and can be used by any party. Unsupported conclusions could expose the investigator to charges of false accusations, which could result in costly civil liability |
| What is the CI Division of the IRS? | The arm of the IRS that investigates tax fraud is known as Criminal Investigation Division, or CI. CI is directed at the portion of U.S. taxpayers who willfully and intentionally violate their known legal duty of voluntarily filing income tax return |
| Is it necessary to report illegal income(such as embezzled money) on income tax returns? | Illegal income, such as income from fraud gains, must be reported on an individual’s income tax return. Using tools such as the net worth method, the IRS and others can prosecute individuals for not paying taxes |
| What is money laundering? | Money laundering is the process by which one conceals the existence, illegal source, or illegal application of income and then disguises that income to make it appear legitimate |
| Which of the following is not a type of tax fraud? | Overstating income |
| Which of the following describes a Chapter 13 bankruptcy? | Reorganization can be used by individuals with dept less than 1 million. |
| Bankruptcy courts do not have which of the following responsibilities? | Appointing trustees, examiners,and committees. |
| Which of the following is not a characteristic of an affidavit of proposed investigator? | Content and extent of detail required do not vary by jurisdiction. |
| Which of the following is the least likely symptom of a bust-out? | Public notice of change in management |
| Which of the following is the major reason why there is so much divorce fraud? | Assets are being taken away from one divorce partner and given to another |
| Which of the following investigative methods would most likely be used more in divorce cases than bankruptcy cases? | Surveillance |
| The person appointed by a bankruptcy judge in Chapter 11 proceeding who investigates allegations of fraud or misconduct by the debtor or its principals is a(n): | Examiner |
| The retention of a fraud investigator in a bankruptcy proceeding must be approved by the bankruptcy judge unless: | An individual creditor of shareholder pays the investigator. |
| Which of the following is not indicator of possible bust-out? | Slow buildup of inventory. |
| Which of the following is an indicator of possible hiding of asset in a divorce? | All of the above are indicators of possible hiding of assets. |
| Which of the following is not a way that individual can commit tax fraud? | Paying the least amount of taxes the individual owes. |
| The Criminal Investigation Division's chief responsibility is to: | Detect taxpayers who willfully and intentionally violate their known legal duty of voluntarily violate their known legal duty of voluntarily filing an income tax return. |
| Which of the following is not an example of tax fraud? | reporting information regarding passive income. |
| If an audit reveals that an individual has underpaid his or her taxes, the auditor: | An auditor can do all of the above. |
| To work as an entry-level CI special agent, | You must meet all of the above conditions. |
| In what ways do e-business transactions pose heightened fraud risks? | Many e-business firms have unproven business models. c. E-business transactions often involve the transfer of confidential information to unseen parties. Personal contact is absent in e-business transactions. |
| What are some common ways e-business fraud is perpetrated? | data theft, spoofing, stealing passwords, sniffing, falsified identity, customer impersonation, false Web site, and e-mail or Web-visit hijacking. |
| How can the authenticity of a party in an e-business transaction be verified? | Authenticity of an e-business partner can never be known absolutely. Digital signatures are the de facto standard for authentication in digital transactions,Other methods include encrypted data, biometrics, and secret codes or passwords. |
| What is sniffing? | viewing of information as it passes along a network communications channel, using specialized hardware attached to a network to monitor or record the network traffic. |
| Why is spoofing a significant risk in e-business? | fraud perpetrators can hide their true identities by supplying changing information on e-mail headers, thus allowing unauthorized access. Spoofing can be used to enable users to change their passwords while those passwords changes are being recorded. |
| What principles are important in password use and training? | password is an authorization control. Passwords authorize only those who know the password to access systems |
| What does bio-metrics offer significant promises as a way to authenticate e-business transactions? | promising fraud prevention tool because each individual has unique biological characteristics, such as retina or fingerprint patterns, that cannot be duplicated. Biometrics offers significantly more security than passwords, |
| How is data-driven. six-step detection approach relevant to e-business fraud detection? | includes understanding the business or operation, understanding fraud exposures, determining the kinds of symptoms frauds generate, proactively searching for those symptoms, analyzing the results, and investigating. |
| Why can it be dangerous to provide credit card information over the internet? Does it stop the risk if you only use credit cards at local business? | risk is more toward the storage of your personal data on the corporation’s servers (and subsequent access by hackers) than in the transfer across the Internet. |
| Can e-business fraud risk ever be completely eliminated? | No fraud risks, including e-business risks, can ever be completely eliminated. Just as we think we have foolproof prevention systems, fraud perpetrators will devise new ways to perpetrate fraud |
| What methods of security through obscurity does school employ? How do these methods increase security? How so they decrease security? | Security through obscurity is the practice of making security measures so complex that would-be attackers are confused and cannot breach the system. |
| Which of the following is not a fraud risk unique to e-business transactions? | Selling new products. |
| E-business transactions make it easier to commit which of the following types of fraud? | Customer impersonation. |
| Which of the following is not an element of a company control environment? | Independent checks. |
| Which of the following is not an internal control activity or procedure? | Internal auditors. |
| Which of the following fraud risk involves viewing information as it passes along channels? | Sniffing |
| Using a subtly different Internet host name to mimic another business is known as: | Web-visit hijacking |
| Passwords and bio metrics are both: | Authorization controls |
| Which of the following human features is generally not used in bio metrics? | Weight |
| Which of the following types of controls is least often used to protect IT processing equipment? | Documents and records |
| What is the most important factor in control effectiveness? | The tone at the top |
| Secure Web transactions connections are based in: | HTTPS |
| Which of the following fraud risk involves changing IP addresses? | Spoofing |
Created by:
tidey4