IAPP Updated CIPP-US Exam Questions and Answers by aarya

The Federal Trade Commission Act (FTCA) was adopted in 1914 as part of the Progressive Era reforms that aimed to curb the power and influence of monopolies and trusts in the U.S. economy. The FTCA created the Federal Trade Commission (FTC) as an independent agency to investigate and prevent unfairmethods of competition and unfair or deceptive acts or practices in or affecting commerce. The FTCA also gave the FTC the authority to issue cease and desist orders, seek injunctions, and impose civil penalties for violations of the law. The FTCA was intended to complement and supplement the existing antitrust laws, such as the Sherman Act and the Clayton Act, that prohibited restraints of trade, price-fixing, mergers, and other anticompetitive conduct.

The other options are not correct, because:

The FTCA did not explicitly address privacy rights of U.S. citizens, although the FTC later used its authority under the FTCA to enforce against unfair or deceptive privacy practices, such as making false or misleading claims, failing to disclose material information, or violating consumers’ choices or expectations regarding their personal data.

The FTCA did not specifically focus on consumer protection, although the FTC later expanded its scope to include consumer protection issues, such as advertising and marketing, credit and finance, privacy and security, and consumer education. The FTC also enforced other consumer protection laws, such as the Truth in Lending Act, the Fair Credit Reporting Act, the Children’s Online Privacy Protection Act, and the CAN-SPAM Act.

The FTCA did not authorize the FTC to negotiate consent decrees with companies violating personal privacy, although the FTC later used consent decrees as a common tool to settle privacy cases and impose remedial measures, such as audits, reports, and compliance programs. Consent decrees are agreements between the FTC and the parties involved in a case that resolve the FTC’s charges without admitting liability or wrongdoing.

References:

FTC website, Federal Trade Commission Act

Britannica website, Federal Trade Commission Act (FTCA)

IAPP CIPP/US Study Guide, Chapter 1: Introduction to the U.S. Privacy Environment, pp. 11-12

IAPP website, Federal Trade Commission Act, Section 5 of

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.

The Red Flag Program Clarification Act of 2010 amended the original Red Flags rule, which required certain financial institutions and creditors to develop and implement a written identity theft prevention program. The Clarification Act narrowed the definition of creditor to include only those who regularly and in the ordinary course of business advance funds to or on behalf of aperson, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the person12. This excludes creditors who advance funds for expenses incidental to a service provided by the creditor to that person3. References:

CIPP/US Practice Questions (Sample Questions), Question 133, Answer B, Explanation B.

IAPP CIPP/US Certified Information Privacy Professional Study Guide, Chapter 4, Section 4.3, p. 108-109.

Red Flag Program Clarification Act of 2010, Section 2, Subsection (b).

The Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act is a law passed in 2003 that establishes the first national standards for the sending of commercial e-mail in the United States. The law requires the Federal Trade Commission (FTC) to enforce its provisions. The law applies to any commercial e-mail message, which is defined as any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service. The law does not apply to transactional or relationship messages, which are messages that facilitate an agreed-upon transaction or update a customer about an existing business relationship. The law also does not apply to non-commercial messages, such as political or charitable solicitations12

The CAN-SPAM Act is intended to help consumers by giving them more control over the commercial e-mails they receive. The law does not require companies to obtain prior consent (opt-in) from consumers before sending them commercial e-mails, but it does require companies to honor consumers’ requests to stop receiving such e-mails (opt-out). The law specifies that each commercial e-mail message must include a clear and conspicuous notice of the opportunity to decline to receive further messages from the sender, and a valid physical postal address of the sender. The sender must provide a functioning return e-mail address or other Internet-based mechanism that allows the recipient to submit an opt-out request. The sender must honor the opt-out request within 10 business days and must not sell, exchange, or transferthe e-mail address of the opt-out requester to another entity, unless the other entity is acting as an agent of the sender12

By requiring companies to allow consumers to opt-out of future e-mails, the CAN-SPAM Act aims to reduce the amount of unwanted and unsolicited commercial e-mail that consumers receive, and to protect their privacy and preferences. The law also imposes other requirements on companies that send commercial e-mails, such as banning false or misleading header information and deceptive subject lines, requiring the identification of the message as an advertisement, and requiring the labeling of sexually explicit content. The law also authorizes the FTC and other federal agencies to enforce the law and impose civil penalties for violations12

References:

Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act)

IAPP CIPP/US Certified Information Privacy Professional Study Guide, Chapter 4: Federal Privacy Laws, Section 4.4: The CAN-SPAM Act