Question 1

Which is not a method of proactive e-commerce fraud prevention?

Accepted Answer

A)  Encryption 
B)  Firewalls 
C)  Digital Signatures 
D)  Biometrics 
E)  All of the above

Question 2

Which of the following is a unique risk for e-commerce?

Accepted Answer

A)  Merger or acquisition activity, which creates pressures to "improve the reported financial results" 
B)  Unproven or flawed business models, with tremendous cash flow pressures. 
C)  Borrowing or issuing stock, which adds additional pressures to "cook the books" 
D)  All of the above

Question 3

Which of the following are controls over authorization of transactions and activities?

Accepted Answer

A)  Passwords. 
B)  Digital Signatures. 
C)  Biometrics. 
D)  All of the above.

Question 4

A risk assessment should:

Accepted Answer

A)  Identify the risk of doing business with e-business partners 
B)  Focus only on financial data 
C)  Be avoided at all cost 
D)  Cover only non-technological areas

Question 5

Fraud risks are higher in e-commerce settings because:

Accepted Answer

A)  Personal contact is limited so the personal hurt that is caused is not seen 
B)  Fraud can be committed electronically instead of by stealing physical assets 
C)  Fraud committed electronically is harder to detect than other types of fraud 
D)  E-commerce is new and few fraud detectors are familiar with electronic fraud schemes

Question 6

All of the following make it easier for perpetrators within an organization to commit e-commerce fraud =except:

Accepted Answer

A)  They know the control environment 
B)  They understand security mechanisms 
C)  They find ways to bypass security 
D)  All of the above

Question 7

Which activity is used legitimately by companies to monitor network traffic, but may also be used illegally to capture confidential information?

Accepted Answer

A)  Sniffing 
B)  Spoofing 
C)  Hijacking 
D)  Impersonation

Question 8

Separation of duties falls under which of the following internal control element

Accepted Answer

A)  Control activities 
B)  Risk assessment 
C)  Control environment 
D)  Monitoring

Question 9

Using techniques to gain passwords and other personal information directly from victims is known as:

Accepted Answer

A)  Social engineering 
B)  Spoofing 
C)  Data theft 
D)  Customer impersonation

Question 10

Defrauding people through e-business is generally __________________ in normal business settings.

Accepted Answer

A)  Easier than 
B)  Harder than 
C)  The same as

Question 11

Which of the following is not a type/category of control activities?

Accepted Answer

A)  Adequate separation of duties (useful for making sure that individuals who authorize transactions are different from those who execute them) 
B)  Adequate documents and records (documents and records are the physical objects by which transactions are entered and summarized and can be the audit trail by which auditors can investigate wrongdoings) 
C)  Proper authorization of transactions and activities (most common controls in e-business include passwords, firewalls, digital signatures, and biometrics) 
D)  Use of internal auditors

Question 12

Viewing information that passes along a network communication channel is referred to as:

Accepted Answer

A)  Falsified Identify 
B)  Spoofing 
C)  Sniffing 
D)  Hijacking

Question 13

Which of the five elements of internal controls is least effective in preventing fraud in e-commerce?

Accepted Answer

A)  Monitoring 
B)  the control environment 
C)  risk assessment 
D)  control activities and procedures

Question 14

Reducing or eliminating the elements that motivate fraud is the best way to prevent fraud. Which of the following element/s can easily be reduced in preventing fraud in e-business?

Accepted Answer

A)  Pressure 
B)  Opportunity 
C)  Rationalization 
D)  All of the above can easily be reduced in e-business

Question 15

Which method of proactive fraud detection works best in an e-business environment?

Accepted Answer

A)  Understanding the business or operations of the organization 
B)  Use databases and system logs to automatically search for symptoms of frauds likely to occur in a particular company. 
C)  Physical examination of assets and records. 
D)  Independent audits and checks on controls.

Question 16

Identify the true statement about control activities in an e-business environment.

Accepted Answer

A)  Although the same types of control activities are used, they are not as effective in e-business. 
B)  Adequate separation of duties is not as important in e-commerce as it is in traditional brick-and-mortar businesses. 
C)  Proper authorization is a key control in e-business - passwords, firewalls, digital signatures and certificates, and biometrics are especially important and must be carefully monitored. 
D)  A and C only 
E)  All of the above

Question 17

Why is fraud detection easier in an e-commerce environment than in a traditional environment?

Accepted Answer

A)  Because the data captured in databases can be analyzed in numerous ways. 
B)  Because records kept in an e-commerce environment are more detailed than those kept in traditional environments. 
C)  Because fewer transactions take place in e-commerce than in traditional environments. 
D)  Because transactions have to be authorized in an e-commerce environment and not in a traditional environment.

Question 18

Specific fraud risks to conducting e-business include:

Accepted Answer

A)  Data theft, hijacking, and biometrics. 
B)  Sniffing, kickbacks, and spoofing. 
C)  Falsified identity, spoofing, and hijacking. 
D)  Unauthorized access to passwords, data theft, and viruses.

Question 19

Generally, the best way to prevent fraud in e-business settings is to focus on:

Accepted Answer

A)  Reducing fraud opportunities 
B)  Buying and implementing virus software 
C)  Keeping software updated 
D)  Hiring security experts

Question 20

Which of the following is an important element of the control environment?

Accepted Answer

A)  Integrity and ethical values 
B)  Board of directors and audit committee participation 
C)  Management's philosophy and operating style 
D)  All of the above

Exam 17: Fraud in E-Commerce