CIPP-US Question #10: Real Exam Question with Answer & Explanation

The correct answer is A. To follow the Disposal Rule by having the reports shredded. The Disposal Rule is a provision of the Fair and Accurate Credit Transactions Act (FACTA) that requires businesses and individuals to take appropriate measures to dispose of sensitive information about consumers, such as credit reports, that are derived from consumer reports. The

Question

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?

Options

ATo follow the Disposal Rule by having the reports shredded
BTo follow the Red Flags Rule by mailing the reports to customers
CTo follow the Privacy Rule by notifying customers that the reports are being stored
DTo follow the Safeguards Rule by transferring the reports to a secure electronic file

Explanation

The Disposal Rule is a provision of the Fair and Accurate Credit Transactions Act (FACTA) that requires businesses and individuals to take appropriate measures to dispose of sensitive information about consumers, such as credit reports, that are derived from consumer reports. The Disposal Rule is intended to reduce the risk of identity theft and fraud by preventing unauthorized access to or use of the information. According to the Disposal Rule, reasonable steps for disposal include burning, pulverizing, or shredding papers that contain consumer report information so that they cannot be read or reconstructed. In this scenario, the most appropriate action for a car dealer holding a paper folder of customer credit reports is to follow the Disposal Rule by having the reports shredded. This would ensure that the car dealer complies with the FACTA and protects the privacy and security of the customers' personal data.

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