Pass the IAPP Certified Information Privacy Professional CIPP-US Questions and answers with CertsForce

A company that develops a privacy policy with standards that are much higher than its competitors may face the risk of being more closely scrutinized for any breaches of policy by regulators, customers, media, or other stakeholders. This is because the company sets a higher expectation for its privacy practices and may be held to a higher standard of accountability and transparency. If the company fails to comply with its own policy or experiences a data breach, it may face more severe consequences, such as reputational damage, loss of trust, legal liability, or regulatory sanctions. References:

IAPP CIPP/US Body of Knowledge, Section I, B, 2

[IAPP CIPP/US Study Guide, Chapter 1, Section 1.4]

 The Red Flags Rule is a regulation that requires financial institutions and creditors to implement a written identity theft prevention program that is designed to detect, prevent, and mitigate identity theft in connection with the opening of a covered account or any existing covered account1. A creditor is any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit2. A covered account is an account that a financial institution or creditor offers or maintains, primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions, such as a credit card account, mortgage loan, automobile loan, margin account, cell phone account, utility account, checking account, or savings account2. A money wire service is a service that allows customers to send or receive money electronically3. The owner of a grocery store who uses a money wire service is not a creditor because he or she does not regularly extend, renew, or continue credit to customers. Therefore, the Red Flags Rule does not apply to the owner of a grocery store who uses a money wire service. References:

1: FTC, Red Flags Rule, https://www.ftc.gov/business-guidance/privacy-security/red-flags-rule

2: FTC, Fighting Identity Theft with the Red Flags Rule: A How-To Guide for Business, https://www.ftc.gov/tips-advice/business-center/guidance/fighting-identity-theft-red-flags-rule-how-guide-business

3: Alessa, Wire Transfer Red Flags: Understanding Money Laundering and Fraud Risks, https://alessa.com/webinars/wire-transfer-red-flags-and-fraud-risks/

The Privacy Act of 1974 is a federal law that regulates the collection, use, and disclosure of personal information by federal agencies.

The Privacy Act of 1974 applies to records that are maintained in a system of records, which is defined as a group of records under the control of an agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifier assigned to the individual.

The Privacy Act of 1974 grants individuals the right to access and amend their records, and requires agencies to provide notice of their systems of records, establish safeguards for the protection of the records, and limit the disclosure of the records to certain authorized purposes.

The Privacy Act of 1974 also establishes civil and criminal penalties for violations of the law, such as unauthorized disclosure, failure to publish a notice, or refusal to grant access or amendment.

The Privacy Act of 1974 does NOT require agencies to obtain the consent of the individual before collecting their personal information. However, the Privacy Act of 1974 does require agencies to inform the individual of the authority for the collection, the purpose and use of the collection, and the effects of not providing the information.

References: : [Overview of the Privacy Act of 1974]

The annual privacy notice requirement under the Gramm-Leach-Bliley Act (GLBA) applies to financial institutions that collect nonpublic personal information from customers and disclose it to nonaffiliated third parties, unless they qualify for an exception. A financial institution is any entity that engages in activities that are financial in nature or incidental to such activities, as defined by section 4(k) of the Bank Holding Company Act of 1956. The King County Savings and Loan is a financial institution under this definition, as it engages in lending money and accepting deposits. Therefore, it is required to provide its customers with an annual privacy notice, unless it meets the conditions for an exception. The Four Winds Tribal College, the Golden Gavel Auction House, and the Breezy City Housing Commission are not financial institutions under the GLBA, as they do not engage in activities that are financial in nature or incidental to such activities. Therefore, they are not required to provide their customers with an annual privacy notice under the GLBA. References:

Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act, section I. Background, paragraph 2.

17 CFR § 248.5 - Annual privacy notice to customers required., paragraph (a) (1).

IAPP CIPP/US Study Guide, page 65.

When implementing data portability, organizations often face significant challenges due to the complexity of managing data transfers. These challenges commonly include concerns about third-party data, technical compatibility for data transmission, and security considerations. However, the technical skillsets available in the transmitting organization is NOT typically identified as a primary challenge because most organizations have or can acquire the necessary technical expertise through training or by outsourcing.

Explanation of Options:

A. The presence of third-party data in the data to be ported: This is a valid challenge, as the inclusion of third-party data can raise legal and contractual concerns about ownership and transferability.

B. Technically compatible systems for transmission feasibility: Ensuring that data can be transferred between systems in compatible formats is a critical and common challenge.

C. Security considerations in relation to the transfer of the data: Data transfers must be secure to prevent unauthorized access or breaches, making this a valid challenge.

D. The technical skillsets available in the transmitting organization: While technical skills are important, organizations usually have the ability to address this issue through hiring, training, or outsourcing, making this the least common challenge.

References from CIPP/US Materials:

IAPP CIPP/US Certification Textbook: Discusses operational challenges related to data portability, including system compatibility, data security, and third-party involvement.

NIST Privacy Framework: Addresses organizational readiness and data transfer risks.

Under the Health Insurance Portability and Accountability Act (HIPAA), entities involved in the handling of protected health information (PHI) are classified as either covered entities or business associates based on their roles and activities.

Definitions Under HIPAA:

Covered Entity (CE):

A healthcare provider, health plan, or healthcare clearinghouse that creates, receives, maintains, or transmits PHI.

Miraculous Healthcare qualifies as a covered entity because it is a medical practice directly providing healthcare services to patients.

Business Associate (BA):

An organization or individual that performs functions, activities, or services involving the use or disclosure of PHI on behalf of a covered entity.

MedApps qualifies as a business associate because it is providing a telehealth app service to Miraculous, which involves hosting and maintaining PHI (e.g., appointment details, patient information).

Analysis of the Relationship:

Miraculous Healthcare: As the healthcare provider, it is responsible for patient care and compliance with HIPAA. Since it directly provides healthcare services to patients, it is the covered entity in this scenario.

MedApps: Although MedApps designed, hosts, and supports the telehealth app, it is providing these services on behalf of Miraculous Healthcare. As such, MedApps is a business associate under HIPAA. This designation requires MedApps to comply with HIPAA regulations through a Business Associate Agreement (BAA), ensuring that it appropriately safeguards the PHI it handles on behalf of Miraculous Healthcare.

Consideration of the Benchmarking Service:

The optional benchmarking service also reinforces MedApps’ role as a business associate. Miraculous Healthcare would need to assess whether the PHI uploaded for benchmarking meets HIPAA’s minimum necessary standard and that MedApps implements appropriate safeguards for PHI used for benchmarking. The BAA would need to address these specific uses.

Explanation of Options:

A. Miraculous Healthcare would be the covered entity because its name and branding are on the app. MedApps would be a business associate because it is hosting the data that supports the app: While this is close, it oversimplifies the reasoning by focusing solely on branding. The covered entity designation is determined by the healthcare services provided, not just branding.

B. MedApps would be the covered entity because it built and hosts the app and all the data. Miraculous Healthcare would be a business associate because it only provides its brand on the app: This is incorrect because MedApps is not directly providing healthcare services. Hosting and maintaining PHI does not make it a covered entity but rather a business associate.

C. Miraculous Healthcare would be a covered entity because it is the healthcare provider; MedApps would also be a covered entity because the data in the app is being shared with it: This is incorrect because MedApps does not independently provide healthcare services to patients. Its role is solely as a service provider to Miraculous.

D. Miraculous Healthcare would be the covered entity because it is the healthcare provider; MedApps would be a business associate because it is providing a service to support Miraculous: This is the correct answer. Miraculous is the covered entity, and MedApps, by hosting the telehealth app and handling PHI on Miraculous’ behalf, is a business associate.

References from CIPP/US Materials:

HIPAA Privacy Rule (45 CFR § 160.103): Defines covered entities and business associates.

Business Associate Agreements (BAAs): HIPAA requires a BAA between covered entities and business associates to ensure PHI is appropriately protected.

IAPP CIPP/US Certification Textbook: Provides detailed examples of covered entities and business associates, along with their roles and responsibilities under HIPAA.

The Department of Commerce (DOC) plays a role in privacy policy by promoting the development and adoption of voluntary codes of conduct, standards, and best practices for the private sector, as well as facilitating cross-border data transfers through mechanisms such as the EU-U.S. Privacy Shield and the APEC Cross-Border Privacy Rules. However, the DOC does not have regulatory authority to enforce privacy laws or impose sanctions for privacy violations. The other agencies listed have some degree of regulatory authority over privacy issues within their respective domains. For example, the Office of the Comptroller of the Currency (OCC) supervises national banks and federal savings associations and enforces the GLBA privacy and security rules for these institutions. The Federal Communications Commission (FCC) regulates interstate and international communications and enforces the privacy and security rules for telecommunications carriers, broadband providers, and voice over internet protocol (VoIP) services. The Department of Transportation (DOT) oversees the transportation sector and enforces the privacy and security rules for airlines, travel agents, and other covered entities under the Aviation and Transportation Security Act (ATSA). References:

IAPP CIPP/US Certified Information Privacy Professional Study Guide, Chapter 1: Introduction to the U.S. Privacy Environment, Section 1.3: Federal Agencies with a Role in Privacy, p. 18-19

IAPP CIPP/US Body of Knowledge, Domain I: Introduction to the U.S. Privacy Environment, Objective I.B: Identify the major federal agencies with a role in privacy, Subobjective I.B.4: Identify the role of the Department of Commerce, p. 7

IAPP CIPP/US Exam Blueprint, Domain I: Introduction to the U.S. Privacy Environment, Objective I.B: Identify the major federal agencies with a role in privacy, Subobjective I.B.4: Identify the role of the Department of Commerce, p. 3

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is a federal law that regulates the privacy and security of health information in the United States. HIPAA preempts state laws that are contrary to its provisions, unless the state laws provide more stringent protections for health information12 HIPAA establishes a floor of federal standards for health information privacy and security, but allows states to enact laws that are more protective of individuals’ rights34 For example, some states may require more specific consent from individuals before disclosing their health information, or impose stricter penalties for violations of health information privacy and security. HIPAA also provides exceptions for certain state laws that serve a compelling public interest, such as public health, safety, or welfare.References:  https://www.findlaw.com/litigation/legal-system/the-supremacy-clause-and-the-doctrine-of-preemption.html

https://www.bonalaw.com/insights/legal-resources/when-does-federal-law-preempt-state-law

California’s SB 1386, also known as the California Security Breach Information Act, was enacted in 2002 and became effective in 2003. It was the first law of its kind in the United States to require commercial entities that own or license personal information of California residents to notify them in the event of a security breach that compromises their unencrypted data. The law aims to protect the privacy and security of personal information and to enable individuals to take preventive measures against identity theft and fraud. The law applies to any business or person that conducts business in California and that owns or licenses computerized data that includes personal information, as defined by the law. Personal information includes an individual’s first name or first initial and last name in combination with any one or more of the following data elements: Social Security number, driver’s license number or California identification card number, account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s financial account, or medical information or health insurance information. The law does not apply to encrypted information, publicly available information, or information that is lawfully obtained from federal, state, or local government records. The law requires the disclosure of a breach of the security of the system to any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The disclosure must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system. The disclosure may be made by written notice, electronic notice, or substitute notice, as specified by the law. The law also requires any person or business that maintains computerized data that includes personal information that the person or business does not own to notify the owner or licensee of the information of any breach of the security of the data immediately following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The law also authorizes a civil action for damages by a customer injured by a violation of the law and provides that the rights and remedies available under the law are cumulative to each other and to any other rights and remedies available under law. References:

California Senate Bill 1386 (2002)

California SB 1386: For the Love of Privacy

What Is the California Security Breach Information Act?

California Raises the Bar on Data Security and Privacy

According to the HIPAA Security Rule, covered entities are responsible for ensuring that their business associates comply with the security standards and safeguards required by the rule. This includes conducting due diligence to assess the business associate’s security capabilities and practices, and monitoring their performance and compliance. Failure to do so may result in a violation of the rule and a penalty by the HHS. In this scenario, HealthCo did not perform due diligence on CloudHealth before entering the contract, and did not conduct audits of CloudHealth’s security measures. This is the most significant reason why HHS might impose a penalty on HealthCo, as it indicates a lack of oversight and accountability for the protection of ePHI. References:

HIPAA Security Rule

HIPAA Business Associate Contracts

HIPAA Enforcement and Penalties