CIPA Fraud Detection Techniques & Reporting 2 — Questions and Answers
Question 1: Which behavioral analytics technique identifies fraud by establishing a baseline of normal user activity and flagging deviations?
- Signature-based detection
- Anomaly detection (Correct answer)
- Rule-based filtering
- Blacklist screening
Correct answer: Anomaly detection
Anomaly detection establishes a behavioral baseline and triggers alerts when activity deviates significantly from that norm.
Question 2: A customer's credit card is used for a $5 purchase followed immediately by a $3,000 purchase in a different country. This pattern is known as what?
- Card skimming
- Card testing followed by high-value fraud (Correct answer)
- Chargeback fraud
- Synthetic identity fraud
Correct answer: Card testing followed by high-value fraud
Fraudsters often test stolen cards with small transactions before making large fraudulent purchases.
Question 3: Which federal agency should receive reports of suspected mail fraud involving identity theft?
- FBI
- FTC
- U.S. Postal Inspection Service (Correct answer)
- CFPB
Correct answer: U.S. Postal Inspection Service
The U.S. Postal Inspection Service has jurisdiction over crimes that use the U.S. mail system, including mail-based identity fraud.
Question 4: Device fingerprinting in fraud detection works by:
- Collecting biometric data from users
- Identifying unique device attributes to track and flag suspicious devices (Correct answer)
- Scanning physical fingerprints via mobile sensors
- Matching device serial numbers against a stolen device registry
Correct answer: Identifying unique device attributes to track and flag suspicious devices
Device fingerprinting collects browser and hardware attributes to create a unique identifier, helping flag devices associated with past fraud.
Question 5: When a financial institution files a Suspicious Activity Report (SAR), who is it submitted to?
- The FBI field office
- The Federal Reserve
- FinCEN (Financial Crimes Enforcement Network) (Correct answer)
- The OCC
Correct answer: FinCEN (Financial Crimes Enforcement Network)
SARs are filed with FinCEN, the Treasury bureau responsible for collecting and analyzing financial intelligence to combat money laundering and fraud.
Question 6: Which of the following is a red flag indicator of synthetic identity fraud?
- Multiple accounts with the same email address
- A credit file with no negative history but many recent credit applications (Correct answer)
- Frequent password resets on a single account
- A customer disputing every charge on their statement
Correct answer: A credit file with no negative history but many recent credit applications
Synthetic identities often have a thin but clean credit file followed by a sudden burst of credit-seeking activity known as a 'bust-out' pattern.
Question 7: Velocity checks in fraud detection systems are primarily designed to flag:
- High-value single transactions
- An unusually high number of transactions in a short time period (Correct answer)
- Transactions originating from foreign IP addresses
- Purchases made outside business hours
Correct answer: An unusually high number of transactions in a short time period
Velocity checks monitor the rate of transactions and trigger alerts when volume exceeds normal thresholds within a defined time window.
CIPA Fraud Detection Techniques & Reporting 2
Which behavioral analytics technique identifies fraud by establishing a baseline of normal user activity and flagging deviations?