Understanding Financial Schemes Quiz

What is a pyramid scheme?

• A system where participants earn money primarily by recruiting more people rather than selling products.

• A strategy where investors receive returns from their own money or money paid by subsequent investors.

• A legitimate multi-level marketing strategy.

• A legal investment strategy approved by the government.

How does a Ponzi scheme differ from a pyramid scheme?

• Ponzi schemes involve selling products at high prices.

• Ponzi schemes promise high returns from what is supposedly a legitimate business activity.

• Ponzi schemes rely solely on selling products, not recruiting members.

• Ponzi schemes are legal under federal law.

Which characteristic is typical of a legitimate multi-level marketing (MLM) business?

• High emphasis on recruiting new members.

• Earnings primarily from selling products or services.

• Promises of high returns with little risk.

• Requiring large upfront investments.

What is affinity fraud?

• Fraud that targets members of identifiable groups based on shared interests or identities.

• A scam that involves randomly calling people to steal their personal information.

• A type of investment that guarantees high returns.

• Fraud that occurs only online.

What happens in a "pump and dump" stock scam?

• Stocks are quickly sold after their prices are artificially increased.

• Stocks are bought at low prices and sold at marginally higher prices.

• Stocks are offered to employees as part of a compensation package.

• Stocks are held long-term for sustainable growth.

What is phishing?

• A method where scammers fish for compliments on social media.

• A technique used to catch fish efficiently in commercial fishing.

• A fraud method involving sending emails or messages to steal personal information.

• A game where players guess the weight of a fish.

Vishing scams are characterized by:

• Sending fake emails to large groups of people.

• Making phone calls to deceive people into providing personal information.

• Creating fake websites to capture financial data.

• Selling nonexistent products online.

What does pharming involve?

• Directly planting viruses on computers.

• Redirecting users from legitimate websites to fraudulent ones to steal information.

• Calling people to offer fake job opportunities.

• Selling fake medication online.

What is a common sign of an employment scam?

• Receiving a job offer without an interview.

• Offering a competitive salary for qualified applicants.

• Requiring professional references.

• None of the above.

Which of the following is a sign of an internet scam?

• A website asking for minimal personal information to create an account.

• An online store offering products at slightly lower than retail prices.

• An email from an unknown sender promising a large sum of money for help transferring funds.

• A social media site that allows you to set privacy settings.