CIPA Financial Account Monitoring & Protection Flashcards

What is 'medical identity theft' and how can it harm a victim?

Answer: Using a victim's identity to obtain medical services, insurance, or prescriptions, leaving incorrect records in their medical files

Medical identity theft corrupts a victim's medical records with another person's health information, potentially leading to misdiagnosis, incorrect treatment, or insurance denial.

How can a CIPA advisor help a client protect their Social Security number (SSN) from misuse?

Answer: Advise limiting who they share their SSN with, monitoring their Social Security statement, and placing a credit freeze

Limiting SSN disclosure, regularly checking the Social Security statement for fraudulent earnings records, and placing a credit freeze are the primary strategies to protect against SSN misuse.

What is 'tax identity theft' and which agency handles related complaints?

Answer: Filing a fraudulent tax return using a victim's SSN to claim a refund; reported to the IRS

Tax identity theft occurs when a criminal uses a stolen SSN to file a fraudulent tax return and collect the victim's refund; victims should report this to the IRS using Form 14039.

A CIPA advisor is working with a client who has been a victim of identity theft. What is the significance of obtaining an IRS Identity Protection PIN (IP PIN)?

Answer: It is a six-digit number that prevents someone else from filing a federal tax return using the client's SSN

An IRS IP PIN is a unique six-digit number that must be included on the client's tax return to verify their identity, preventing fraudsters from filing a return using their SSN.

Which of the following is a key benefit of identity theft insurance in a protection plan?

Answer: It helps cover out-of-pocket expenses incurred while recovering from identity theft, such as legal fees and lost wages

Identity theft insurance reimburses victims for expenses related to recovery efforts—such as notary fees, certified mail, attorney fees, and lost wages—but does not prevent theft or replace stolen money.

What is 'child identity theft' and why are children particularly vulnerable?

Answer: Using a child's SSN to open credit accounts or obtain benefits, often going undetected for years because children don't have credit activity to monitor

Children's SSNs are attractive targets because they have clean credit histories and the fraud typically goes undetected until the child applies for credit as an adult.