CFCI Study Guide – Questions and
Answers Updated (2024/2025) Rated A+
What is collusion in fraud?
✔✔Collusion occurs when two or more individuals work together to commit fraud, making it
harder to detect.
What is expense reimbursement fraud?
✔✔Expense reimbursement fraud happens when an employee submits false or inflated expense
claims for personal gain.
How does ghost employee fraud work?
✔✔Ghost employee fraud occurs when a fake employee is added to payroll, allowing someone
to collect wages for non-existent work.
What is insider trading?
✔✔Insider trading is the illegal practice of using confidential company information to buy or sell
stocks for financial gain.
1
,What is wire fraud?
✔✔Wire fraud involves using electronic communications, such as emails or phone calls, to
deceive victims and commit fraud.
How do fraudsters use social engineering?
✔✔Fraudsters manipulate people into revealing confidential information by exploiting trust,
fear, or urgency.
What is affinity fraud?
✔✔Affinity fraud targets specific groups, such as religious or ethnic communities, by using
shared connections to build trust and deceive victims.
What is the difference between fraud and an error?
✔✔Fraud is intentional deception for personal gain, while an error is an unintentional mistake in
financial or business records.
What is a fraud hotline?
✔✔A fraud hotline is a confidential reporting system that allows employees or individuals to
report suspected fraud anonymously.
2
,What is vendor fraud?
✔✔Vendor fraud occurs when suppliers or employees manipulate the procurement process for
financial gain, such as inflating invoices or delivering substandard goods.
What is bank fraud?
✔✔Bank fraud involves deceptive practices to obtain money or assets from a financial institution
illegally.
How does data analytics help in fraud detection?
✔✔Data analytics identifies patterns, anomalies, and unusual transactions that may indicate
fraudulent activities.
What is tax fraud?
✔✔Tax fraud occurs when individuals or businesses intentionally falsify information to avoid
paying taxes.
What is bust-out fraud?
3
, ✔✔Bust-out fraud happens when fraudsters build a good credit history, take out large loans or
credit, and then disappear without repaying.
What is check kiting?
✔✔Check kiting is a form of fraud where a person writes bad checks between multiple accounts
to create an illusion of available funds.
What is synthetic identity fraud?
✔✔Synthetic identity fraud occurs when fraudsters combine real and fake personal information
to create a new identity for financial fraud.
What is return fraud?
✔✔Return fraud involves abusing a retailer’s return policy to receive refunds for stolen, used, or
non-existent products.
How can artificial intelligence help in fraud detection?
✔✔AI helps detect fraud by analyzing large data sets, identifying unusual patterns, and flagging
suspicious transactions in real time.
4
Answers Updated (2024/2025) Rated A+
What is collusion in fraud?
✔✔Collusion occurs when two or more individuals work together to commit fraud, making it
harder to detect.
What is expense reimbursement fraud?
✔✔Expense reimbursement fraud happens when an employee submits false or inflated expense
claims for personal gain.
How does ghost employee fraud work?
✔✔Ghost employee fraud occurs when a fake employee is added to payroll, allowing someone
to collect wages for non-existent work.
What is insider trading?
✔✔Insider trading is the illegal practice of using confidential company information to buy or sell
stocks for financial gain.
1
,What is wire fraud?
✔✔Wire fraud involves using electronic communications, such as emails or phone calls, to
deceive victims and commit fraud.
How do fraudsters use social engineering?
✔✔Fraudsters manipulate people into revealing confidential information by exploiting trust,
fear, or urgency.
What is affinity fraud?
✔✔Affinity fraud targets specific groups, such as religious or ethnic communities, by using
shared connections to build trust and deceive victims.
What is the difference between fraud and an error?
✔✔Fraud is intentional deception for personal gain, while an error is an unintentional mistake in
financial or business records.
What is a fraud hotline?
✔✔A fraud hotline is a confidential reporting system that allows employees or individuals to
report suspected fraud anonymously.
2
,What is vendor fraud?
✔✔Vendor fraud occurs when suppliers or employees manipulate the procurement process for
financial gain, such as inflating invoices or delivering substandard goods.
What is bank fraud?
✔✔Bank fraud involves deceptive practices to obtain money or assets from a financial institution
illegally.
How does data analytics help in fraud detection?
✔✔Data analytics identifies patterns, anomalies, and unusual transactions that may indicate
fraudulent activities.
What is tax fraud?
✔✔Tax fraud occurs when individuals or businesses intentionally falsify information to avoid
paying taxes.
What is bust-out fraud?
3
, ✔✔Bust-out fraud happens when fraudsters build a good credit history, take out large loans or
credit, and then disappear without repaying.
What is check kiting?
✔✔Check kiting is a form of fraud where a person writes bad checks between multiple accounts
to create an illusion of available funds.
What is synthetic identity fraud?
✔✔Synthetic identity fraud occurs when fraudsters combine real and fake personal information
to create a new identity for financial fraud.
What is return fraud?
✔✔Return fraud involves abusing a retailer’s return policy to receive refunds for stolen, used, or
non-existent products.
How can artificial intelligence help in fraud detection?
✔✔AI helps detect fraud by analyzing large data sets, identifying unusual patterns, and flagging
suspicious transactions in real time.
4
