CIPA CIPA Financial Account Monitoring & Protection 1 — Questions and Answers
Question 1: What is a credit freeze (security freeze) and how does it protect against identity theft?
- It lowers your credit score to deter lenders
- It restricts access to your credit report, preventing new credit from being opened in your name (Correct answer)
- It automatically closes existing credit accounts
- It alerts you when your credit score changes
Correct answer: It restricts access to your credit report, preventing new credit from being opened in your name
A credit freeze blocks potential creditors from accessing your credit report, making it nearly impossible for identity thieves to open new accounts in your name.
Question 2: Under the Fair Credit Reporting Act (FCRA), how often can a consumer request a free credit report from each of the three major bureaus?
- Once every two years
- Once per year (Correct answer)
- Once every six months
- Unlimited free requests
Correct answer: Once per year
The FCRA entitles consumers to one free credit report per year from each of the three major bureaus (Equifax, Experian, TransUnion) via AnnualCreditReport.com.
Question 3: What is a fraud alert on a credit file and how does it differ from a credit freeze?
- A fraud alert closes all existing accounts; a freeze opens new ones
- A fraud alert asks lenders to take extra steps to verify identity before extending credit; a freeze blocks access entirely (Correct answer)
- A fraud alert and a credit freeze are identical protections
- A fraud alert is permanent; a freeze expires after 90 days
Correct answer: A fraud alert asks lenders to take extra steps to verify identity before extending credit; a freeze blocks access entirely
A fraud alert flags your credit file so lenders must verify your identity before issuing new credit, while a credit freeze completely restricts access to the file.
Question 4: Which federal agency should a client contact to report identity theft and create an official recovery plan?
- The Social Security Administration (SSA)
- The Federal Trade Commission (FTC) at IdentityTheft.gov (Correct answer)
- The Consumer Financial Protection Bureau (CFPB)
- The Department of Homeland Security (DHS)
Correct answer: The Federal Trade Commission (FTC) at IdentityTheft.gov
The FTC's IdentityTheft.gov provides a personalized recovery plan and official documentation that can be used with creditors and law enforcement.
Question 5: A client notices an unfamiliar account on their credit report. What is the first recommended action a CIPA advisor should suggest?
- Wait 90 days to see if the account resolves itself
- Dispute the account with the credit bureau and the original creditor, and place a fraud alert (Correct answer)
- Close all existing bank accounts immediately
- Change all social media passwords
Correct answer: Dispute the account with the credit bureau and the original creditor, and place a fraud alert
Disputing fraudulent accounts with the credit bureau and creditor, combined with placing a fraud alert, initiates the formal correction process and protects against further fraud.
Question 6: What is 'new account fraud' in the context of identity theft?
- Changing the address on an existing account
- Using a victim's stolen personal information to open brand new credit accounts (Correct answer)
- Taking over a victim's existing bank account
- Filing a fraudulent tax return using a victim's SSN
Correct answer: Using a victim's stolen personal information to open brand new credit accounts
New account fraud occurs when a thief uses a victim's stolen PII—such as SSN and date of birth—to apply for new credit cards, loans, or other financial accounts.
CIPA CIPA Financial Account Monitoring & Protection 1
What is a credit freeze (security freeze) and how does it protect against identity theft?