Banking Digital Banking 4 — Questions and Answers
Question 1: A customer receives a text message claiming their account is frozen and asking them to call a number to verify their information. This type of SMS-based scam is called:
- Vishing
- Smishing (Correct answer)
- Pharming
- Spoofing
Correct answer: Smishing
Smishing is a phishing attack conducted via SMS text messages, tricking recipients into revealing personal or financial information.
Question 2: Which of the following is a key advantage of real-time payment networks (such as RTP or FedNow) over traditional ACH transfers?
- They are free for all consumers by federal mandate
- Funds are available to the recipient within seconds, 24/7/365 (Correct answer)
- They eliminate the need for routing numbers
- They are only available to business accounts
Correct answer: Funds are available to the recipient within seconds, 24/7/365
Real-time payment networks settle transactions instantly and operate around the clock, unlike ACH which typically takes 1–3 business days.
Question 3: What does 'tokenization' mean in the context of digital payment security?
- Converting currency into cryptocurrency tokens
- Replacing sensitive payment card data with a non-sensitive placeholder value (Correct answer)
- Encrypting bank statements using blockchain
- Issuing digital tokens as loyalty rewards
Correct answer: Replacing sensitive payment card data with a non-sensitive placeholder value
Tokenization replaces a card's actual account number with a randomly generated token, so merchants never handle the real card data, reducing fraud risk.
Question 4: Under the Electronic Fund Transfer Act (EFTA), if a customer reports an unauthorized debit card transaction within 2 business days, their maximum liability is:
- $0
- $50 (Correct answer)
- $500
- $5,000
Correct answer: $50
EFTA limits consumer liability to $50 if an unauthorized electronic funds transfer is reported within 2 business days of discovering the loss.
Question 5: A bank's mobile app crashes for thousands of users during peak hours because its servers cannot handle the load. This is an example of a failure in:
- Cybersecurity policy
- Scalability and infrastructure resilience (Correct answer)
- Anti-money laundering compliance
- Customer identity verification
Correct answer: Scalability and infrastructure resilience
Scalability refers to a system's ability to handle increased load; infrastructure resilience ensures services remain available during high-demand periods.
Question 6: Which of the following best describes 'open banking'?
- Banks offering 24/7 customer service via chat
- A framework where banks share customer financial data with third parties via APIs with customer consent (Correct answer)
- Free checking accounts with no minimum balance requirement
- A regulatory requirement to disclose all bank fees publicly
Correct answer: A framework where banks share customer financial data with third parties via APIs with customer consent
Open banking is a system that lets consumers share their financial data securely with authorized third-party providers through standardized APIs.
Question 7: What is 'chargeback fraud' (also known as friendly fraud) in digital banking?
- A hacker charging fees to a stolen credit card
- A customer making a legitimate purchase then falsely disputing it to get a refund while keeping the goods (Correct answer)
- A bank erroneously double-charging a transaction
- A merchant inflating prices for online purchases
Correct answer: A customer making a legitimate purchase then falsely disputing it to get a refund while keeping the goods
Friendly fraud occurs when a customer intentionally disputes a valid transaction to reclaim money while retaining the product or service.
Banking Digital Banking 4
A customer receives a text message claiming their account is frozen and asking them to call a number to verify their information.
This type of SMS-based scam is called: