Quiz: Consumer Protection and Financial Security
Test your understanding of consumer protection and financial security concepts.
1. What is identity theft?
- Someone stealing your wallet
- Someone using your personal information without permission to commit fraud
- A company selling your email address
- Forgetting your passwords
Show Answer
The correct answer is B. Identity theft occurs when someone uses your personal information (Social Security number, credit card numbers, name, etc.) without permission, typically to commit fraud like opening credit cards, taking out loans, filing fraudulent tax returns, or receiving medical care in your name. Option A is simple theft, not identity theft. Options C and D don't constitute identity theft.
Concept Tested: Identity Theft
2. Which practice best protects your Social Security number?
- Carry your Social Security card in your wallet for easy access
- Don't carry your Social Security card and only provide SSN when absolutely necessary
- Post your SSN on social media for friends
- Give your SSN to anyone who asks
Show Answer
The correct answer is B. Your Social Security number is the master key to your identity. Never carry your Social Security card in your wallet, only provide your SSN when absolutely necessary (employment, credit applications, tax forms), and ask why it's needed and how it will be protected. Never give it over the phone unless you initiated the call to a verified number. With your SSN, thieves can open credit accounts, file tax returns, and steal benefits.
Concept Tested: Identity Theft Prevention
3. What should you do if you discover identity theft?
- Wait to see if it resolves itself
- Only change your passwords
- Immediately place fraud alerts, file FTC and police reports, close compromised accounts, and freeze your credit
- Just contact the credit bureaus
Show Answer
The correct answer is C. If you discover identity theft, act immediately: (1) document everything, (2) place fraud alerts on credit reports, (3) file reports with FTC (IdentityTheft.gov) and police, (4) close compromised accounts in writing, (5) freeze your credit to prevent new accounts, and (6) monitor and follow up persistently. Time is critical—the faster you act, the less damage occurs and the easier it is to resolve.
Concept Tested: Identity Theft Prevention
4. Why should you use different passwords for every account?
- It makes passwords easier to remember
- If one site is breached, hackers can't use that password on your other accounts
- Password managers require unique passwords
- It's required by law
Show Answer
The correct answer is B. Using unique passwords for each account prevents "credential stuffing" attacks, where hackers try stolen passwords from one breach on multiple sites. If you reuse passwords and one site is breached, all accounts with that password are compromised. One strong password used everywhere is worse than unique mediocre passwords. Password managers make it easy to use unique, strong passwords for every account.
Concept Tested: Password Security
5. What is two-factor authentication (2FA)?
- Using two different passwords
- Requiring two types of verification—something you know (password) and something you have (phone/key)
- Logging in from two devices
- Changing your password twice
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The correct answer is B. Two-factor authentication requires two different types of verification to log in: something you know (password) plus something you have (phone receiving a code, security key) or something you are (fingerprint, face). Even if someone steals your password, they can't access your account without the second factor. 2FA blocks 99.9% of automated attacks and should be enabled on all important accounts, especially email and financial accounts.
Concept Tested: Two-Factor Authentication
See: Understanding 2FA
6. Which is a red flag of a phishing email?
- Personalized greeting with your name
- Urgent language threatening account closure with a suspicious link
- Legitimate company email domain
- No links, just informational content
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The correct answer is B. Phishing emails typically use urgent language ("Your account will be closed!" "Suspicious activity detected!"), generic greetings, suspicious links, and spelling/grammar errors. They impersonate legitimate organizations to steal login credentials or personal information. Never click links in unsolicited emails—go directly to the company's website by typing the URL yourself. Real companies don't threaten account closure via email or demand immediate action through links.
Concept Tested: Phishing Scams
See: Recognizing Phishing
7. What is a Ponzi scheme?
- A legitimate investment strategy
- A fraudulent investment that pays returns to earlier investors using money from new investors
- A type of bank account
- A government savings bond
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The correct answer is B. A Ponzi scheme is a fraudulent investment operation that pays returns to earlier investors using money from new investors rather than from legitimate profits. The scheme inevitably collapses when new investors stop joining. Red flags include guaranteed high returns with low risk, consistent returns regardless of market conditions, unregistered investments, secretive strategies, and difficulty withdrawing money. Bernie Madoff's $65 billion fraud is the most famous example.
Concept Tested: Ponzi Schemes
8. What is the main difference between a legitimate multi-level marketing (MLM) company and a pyramid scheme?
- No difference—they're the same thing
- Legitimate MLMs earn primarily from product sales; pyramid schemes earn primarily from recruiting
- Pyramid schemes are legal; MLMs are not
- MLMs don't require payment to join
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The correct answer is B. Legitimate MLMs focus on selling actual products to real customers and earn income from those sales. Pyramid schemes focus on recruiting new participants who pay to join, with little or no legitimate product sales. In pyramid schemes, only those at the top profit while the majority lose money. Red flags of pyramid schemes include requiring payment to participate, emphasizing recruiting over selling products, and promising easy money with minimal work.
Concept Tested: Pyramid Schemes
9. What does the Consumer Financial Protection Bureau (CFPB) do?
- Provides loans to consumers
- Protects consumers in the financial sector, handles complaints, and enforces consumer financial laws
- Sets interest rates for banks
- Manages Social Security benefits
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The correct answer is B. The CFPB is a federal agency that protects consumers in the financial sector by enforcing consumer financial laws, handling complaints against financial institutions, and providing consumer education. You can submit complaints at consumerfinance.gov/complaint. The CFPB investigates complaints, requires company responses, and takes enforcement action against companies breaking laws. They cover credit reporting, debt collection, mortgages, credit cards, bank accounts, and student loans.
Concept Tested: CFPB Protection
10. What is a credit freeze?
- When your credit card stops working
- A restriction on your credit report that prevents new accounts from being opened without your permission
- When you stop making payments
- A type of credit card
Show Answer
The correct answer is B. A credit freeze (security freeze) restricts access to your credit report, making it nearly impossible for identity thieves to open new accounts in your name. You control who can access it with a PIN/password. Freezing is free, doesn't affect your credit score, and doesn't prevent you from using existing accounts. It's the most effective protection against identity theft and should be used if you're a victim of identity theft or want maximum protection.
Concept Tested: Credit Freeze