Certified Information Privacy Professional – United States (CIPP/US) — Question 4

Under the Fair and Accurate Credit Transactions Act (FACTA), what is the most appropriate action for a car dealer holding a paper folder of customer credit reports?

Answer options

• A. To follow the Disposal Rule by having the reports shredded
• B. To follow the Red Flags Rule by mailing the reports to customers
• C. To follow the Privacy Rule by notifying customers that the reports are being stored
• D. To follow the Safeguards Rule by transferring the reports to a secure electronic file

Correct answer: A

Explanation

The correct answer is A, as the Disposal Rule requires proper destruction of consumer information to prevent unauthorized access. Option B is incorrect because the Red Flags Rule pertains to identity theft prevention, not report distribution. Option C is not applicable, as the Privacy Rule does not mandate notification about storage, and option D is incorrect because the Safeguards Rule focuses on protecting information, not transferring it to electronic formats.