Certified Information Privacy Professional – United States (CIPP/US) — Question 28

In what way does the “Red Flags Rule” under the Fair and Accurate Credit Transactions Act (FACTA) relate to the owner of a grocery store who uses a money wire service?

Answer options

• A. It mandates the use of updated technology for securing credit records
• B. It requires the owner to implement an identity theft warning system
• C. It is not usually enforced in the case of a small financial institution
• D. It does not apply because the owner is not a creditor

Correct answer: D

Explanation

The correct answer is D because the 'Red Flags Rule' applies specifically to creditors, and a grocery store owner using a money wire service does not fall under that category. Options A and B are incorrect as they do not accurately describe the requirements of the rule, while option C misinterprets the enforcement of the rule regardless of the size of the institution.