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IAPP Certification > Module 8: Financial Privacy > Flashcards

Module 8: Financial Privacy Flashcards

1
Q

3 Components of Financial Privacy

A
  • Confidentiality
  • Security
  • Laws & Regulations
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2
Q

Financial Privacy:

Confidentiality

A

– ensure the confidentiality of banking and other financial records

– encourage honesty regarding assets, debts, and ability to pay

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3
Q

Financial Privacy:

Security

A

To ensure the security of confidential information and protection from theft and
fraud

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4
Q

Financial Privacy:

Laws & Regulations

A
    • restrict how financial service firms may collect, use and disclose personal info
  • -ensure financial info is accurate and fairly shared
  • -establish rules about reporting obligations
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5
Q

FCRA?

Why was it formed?

What is it?

A

Fair Credit Reporting Act (or FCRA)

rise of consumer credit led merchants to share in-depth customer data to facilitate lending to households

congress passed FCRA because individuals were being harmed by inaccurate information that they could neither see nor correct

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6
Q

FRCA

3 components of the law are?

A

1) Regulations

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7
Q

FRCA Regulations

A

Regulates consumer reporting agencies (CRAs)

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8
Q

FCRA Provisions

A

The FCRA mandates accurate & relevant data collection and provides privacy rights in consumer reports:

> Consumers have the ability to access and correct their info

> Limits use of consumer reports to “permissible purposes”

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9
Q

FCRA Enforcement

A

The FTC, the Consumer Financial Protection Bureau (or CFPB), and state attorneys general enforcement of the FCRA through:

> Dispute resolution
Private right of action
Government actions

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10
Q

What are CRAs?

A

CRAs compile or evaluate personal information to furnish consumer reports to third parties for a fee

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11
Q

What is a consumer report?

A

A “consumer report” is any communication by a CRA, related to an individual, which is used to establish that individual’s eligibility for:

    • credit
    • insurance
    • employment
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12
Q

What is an investigative consumer report?

A

– gives information about one’s:
>character,
>reputation
>mode of living, etc.

– obtained through a personal interview

– FCRA limits the use of medical information obtained from a CRA.

  • If needed for employment purposes, written consent is needed, and medical info must be relevant
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13
Q

FACTA 2003

A

The Fair and Accurate Credit Transactions Act (FACTA) passed in 2003

-amended the FCRA to enact stronger consumer protections including

> truncation of credit and debit card #s

> affording consumers the right to free annual credit report from 3 national credit agencies

> requiring regulators to implement the disposal rule and red flags rule

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14
Q

FACTA 2010

A

FTC updated in 2010 updating the disclosure required by companies advertising “free credit reports”.

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15
Q

The Disposal Rule

Applies to?

A

individual or entity that uses a consumer report for a business purpose

EX:
>consumer reporting agencies
>lenders
>employers
>insurers
>landlords
>car dealers
>attorneys
>debt collectors
>government agencies
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16
Q

The Disposal Rule

Requirement?

A

dispose of that consumer information in a way that prevents unauthorized access and misuse of the data

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17
Q

The Disposal Rule

Violations

A

Civil liability as well as federal and state enforcement actions

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18
Q

Red Flag Rule

Applies to?

A

Put into effect under FACTA

Financial institutions, such as 
> banks
> saving and loan associations
> credit unions
> creditors
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19
Q

Red Flag Rule

Requirements

A

Develop a set of rules to mandate: >detection
>prevention and mitigation of
identity theft

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20
Q

Red Flags Rule

Things to note

A
  • Suspicious identification documents
  • alerts
  • unusual use of a covered account
  • consumer report warnings
  • suspicious personal identifying data
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21
Q

Select Disposal Rule or Red Flags Rule (or both)?

Violators may face civil liability, as well as federal and state enforcement actions

A

Disposal Rule

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22
Q

Select Disposal Rule or Red Flags Rule (or both)?

Includes discarding, abandonment, donation, sale, or transfer of information of documents

A

Disposal Rule

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23
Q

Select Disposal Rule or Red Flags Rule (or both)?

Applies to both small and large organizations

A

Disposal Rule
&
Red Flags Rule

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24
Q

Select Disposal Rule or Red Flags Rule (or both)?

Does not apply to creditors who extend credit only for “expenses incidental to a service”

A

Red Flags Rule

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25
Q

Select Disposal Rule or Red Flags Rule (or both)?

Develop and implement written identity theft detection programs

A

Red Flags Rule

26
Q

Select Disposal Rule or Red Flags Rule (or both)?

A

Red Flags Rule

27
Q

GLBA stands for?

A

Gramm-Leach-Bliley Act

28
Q

What does GLBA regulate?

A

regulates management of nonpublic personal info

29
Q

Who does GLBA apply to?

What is the penalty?

A

Financial info provided by a consumer from a transaction or service otherwise obtained

penalties under the Financial Institution Reform, Recovery and Enforcement (FIRREA)

30
Q

GLBA Privacy Rules

A

financial institutions to provide initial and annual privacy notices that are clear, conspicuous, and accurate, and inform customers of their rights to opt-out and process opt-out requests within 30 days.

financial institutions to share any info they have within:

> their affiliated and non-affiliated companies,
joint marketing partners
other 3rd parties provided that the notice standard is met and the FCRA-mandated opt-out is offered.

31
Q

3 Rules of the GLBA Privacy Rule

A
  • Privacy Notice
  • Information sharing
  • Compliance
32
Q

GLBA Privacy Rule:

Privacy notice must include:

A 
Notices must include:
• What is collected
• With whom information is being shared
• How information will be safeguarded
• How consumers can opt out
33
Q

GLBA Privacy Rule:

Information Sharing

A

Once notice and opt-out standards have been met, consumer information may be
shared with:

  • Affiliated companies
  • Joint marketing partners
  • Nonaffiliated companies
  • Other third parties
34
Q

GLBA Privacy Rule:

Compliance

A

Comply with regulatory standards established by government authorities to:

• Protect the security and confidentiality of customer information

• Protect against security threats and unauthorized access to or uses of
customer information

35
Q

GLBA Safegaurd Rule:

defined?

A

became effective in 2003.

requires institutions to develop and implement a comprehensive information security program

36
Q

GLBA Safegaurd Rule:

3 levels of security

A
  • administrative
  • technical
  • physical
37
Q

GLBA Safegaurd Rule:

program design

A
  • ensure the security and confidentiality of customer information
  • protect against any anticipated threats or hazards to information
  • protect against unauthorized access to or use of information that could result in substantial harm or inconvenience to customers
38
Q

GLBA Safegaurd Rule:

program implementation

A
  • designate an employee to coordinate safeguards
  • identify and assess risks and evaluate the effectiveness of the safeguards
  • design, implement and monitor a safeguard program
  • select and provide oversight of appropriate service providers
39
Q

GLBA Level of Security:

Administrative security

A
    • Program definition
    • management of workforce risks
    • employee training
    • vendor oversight
40
Q

GLBA Level of Security:

Technical security:

A
    • Computer systems
    • Networks and applications
    • Access controls and encryption
41
Q

GLBA Level of Security:

Physical security

A
    • Facilities
    • environmental safeguards
    • business continuity
    • disaster recovery
42
Q

GLBA Level of Security:

Program design

A

– Ensure the security and confidentiality of customer information

– Protect against any anticipated threats or hazards to information

– Protect against unauthorized access to or use of information that could result in
substantial harm or inconvenience to customers

43
Q

GLBA Level of Security:

Program implementation

A

– Designate an employee to coordinate safeguards

– Identify and assess risks and evaluate the effectiveness of the safeguards

– Design, implement and monitor a safeguard program

– Select and provide oversight of appropriate service providers

44
Q

California SB-1

defined

A

builds upon GLBA

-heightened and increased responsibilities for protecting information and disclosing information and how you can do it and with whom and for what purposes

45
Q

California SB-1

Fines

A

low end $2500
up to $500,000

egregious offender: no cap

46
Q

California SB-1 defined

A

California Financial Information Privacy Act (SB-1)

47
Q

About California SB-1

A
  • Expands GLBA
  • Increases disclosure requirements
  • Grants consumers right to opt out of information sharing
48
Q

Dodd-Frank and Consumer Protection

background?

A

in response to financial crisis of 2008, congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. Signed into law June 2010

49
Q

Dodd-Frank and Consumer Protection

What law did it create?

A

The act created the new Consumer Financial Protection Bureau (CFPB) as an independent bureau
within the Federal Reserve that oversees the relationship between consumers and financial
product and services providers.

50
Q

CFPB provisions?

A
  • rule-making authority

- enforcement

51
Q

CFPB

Rule-making authority

A
  • FCRA and GLBA

- Specific laws related to financial privacy and consumer issues

52
Q

CFPB

Enforcement

A
  • conducts investigations
  • issues subpoenas
  • holds hearings and commences civil actions against offenders
53
Q

Online Banking

Security Measures

A
  • Operating systems
  • Internet browser
  • firewalls, antivirus, and anti-malware programs
  • passwords and encryptions
54
Q

Online Banking

Privacy measures

A
  • authentication methods
  • public wifi dangers
  • mobile antivirus and malware detection software
  • mobile privacy policy
  • opt-out option of mobile ad targeting
55
Q

What are some major components of financial privacy? Select all that apply.

A) Confidentiality
B) Laws and regulations
C) Security
D) Anonymity

A

A, B, and C

56
Q

What does CRA stand for?

A) Confirmed right of action
B) Credit reform act
C) cooperate retail authorities
D) Consumer reporting agencies

A

D) Consumer reporting agencies

57
Q

Which is a provision of the Fair Credit Reporting Act (FCRA)? Select all that apply.

A) Use of consumer reports is limited to three instances per six months
B) Use of consumer reports is limited to “permissible purposes”
C) Consumers have the ability to access and correct their information
D) Consumers may request annual updates and alerts

A

B and C

58
Q

True or False?

The Fair Credit Reporting Act (FCRA) amended the Fair and Accurate Credit Transactions Act (FACTA)

A

False

59
Q

True or false?

The FACTA Disposal Rule requires any entity that uses a consumer report for a business purpose to dispose of it in a way that prevents unauthorized access and misuse of
the data.

A

True

60
Q

Which act regulates financial institutions and their management of nonpublic personal
information?

A) Fair Credit Reporting Act (FCRA)

B) Fair and Accurate Credit Transactions Act (FACTA)

C) Gramm-Leach-Bliley Act (GLBA)

D) Dodd-Frank Wall Street Reform and Consumer Protection Act

A

D

61
Q

Under the GLBA Privacy Rule, what must a privacy notice include? Select all that apply.

A) What is collected
B) With whom information is being shared
C) How information will be safeguarded
D) How consumers can opt out

A

All of the above

62
Q

Which authority was created by the Dodd-Frank Wall Street Reform and Consumer
Protection Act?

A) Bureau of the Fiscal Service (Fiscal Service)

B) Consumer Financial Protection Bureau (CFPB)

C)Bureau of Consular Affairs (CA)

D)Federal Financing Bank (FFB)

A

A

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