CIPA Fraud Detection Techniques & Reporting 3

Question 1

Under the Fair Credit Reporting Act (FCRA), a consumer who discovers fraudulent accounts must notify which entity to place a fraud alert?

Accepted Answer

Any one of the three major credit bureaus

Answer

Under FCRA, notifying any one of the three major credit bureaus (Equifax, Experian, TransUnion) triggers them to notify the other two automatically.

Question 2

Geolocation mismatch fraud occurs when:

Accepted Answer

A transaction's IP location conflicts with the cardholder's known location or billing address

Answer

Geolocation mismatch flags occur when the IP address used for a transaction is in a different location than where the card was legitimately issued or used.

Question 3

Which type of fraud involves the unauthorized use of a person's existing account credentials to access and exploit their account?

Accepted Answer

Account takeover (ATO) fraud

Answer

Account takeover fraud occurs when a fraudster obtains legitimate credentials (often via phishing or data breaches) and hijacks an existing account.

Question 4

A CIPA advisor recommending a 'freeze' versus a 'fraud alert' should know that a security freeze:

Accepted Answer

Blocks new credit from being opened without the consumer lifting the freeze

Answer

A security freeze (credit freeze) restricts access to the credit report entirely, preventing new accounts from being opened, whereas a fraud alert only asks creditors to verify identity.

Question 5

Which machine learning approach is commonly used in fraud detection to handle highly imbalanced datasets where fraud cases are rare?

Accepted Answer

Oversampling techniques such as SMOTE

Answer

SMOTE (Synthetic Minority Oversampling Technique) creates synthetic fraud examples to balance the dataset, improving model sensitivity to rare fraud events.

(CIPA) Certified Identity Protection Advisor Practice Test

(CIPA) Certified Identity Protection Advisor Practice Test

CIPA Fraud Detection Techniques & Reporting 3