CIPT practice question 6 of 30

SCENARIO Carol was a U.S.-based glassmaker who sold her work at art festivals. She kept things simple by only accepting cash and personal checks. As…

Full set: 220 questions
SCENARIO Carol was a U.S.-based glassmaker who sold her work at art festivals. She kept things simple by only accepting cash and personal checks. As business grew, Carol couldn't keep up with demand, and traveling to festivals became burdensome. Carol opened a small boutique and hired Sam to run it while she worked in the studio. Sam was a natural salesperson, and business doubled. Carol told Sam, “I don't know what you are doing, but keep doing it!" But months later, the gift shop was in chaos. Carol realized that Sam needed help so she hired Jane, who had business expertise and could handle the back-office tasks. Sam would continue to focus on sales. Carol gave Jane a few weeks to get acquainted with the artisan craft business, and then scheduled a meeting for the three of them to discuss Jane's first impressions. At the meeting, Carol could not wait to hear Jane's thoughts, but she was unprepared for what Jane had to say. “Carol, I know that he doesn't realize it, but some of Sam’s efforts to increase sales have put you in a vulnerable position. You are not protecting customers’ personal information like you should.” Sam said, “I am protecting our information. I keep it in the safe with our bank deposit. It's only a list of customers’ names, addresses and phone numbers that I get from their checks before I deposit them. I contact them when you finish a piece that I think they would like. That's the only information I have! The only other thing I do is post photos and information about your work on the photo sharing site that I use with family and friends. I provide my email address and people send me their information if they want to see more of your work. Posting online really helps sales, Carol. In fact, the only complaint I hear is about having to come into the shop to make a purchase.” Carol replied, “Jane, that doesn’t sound so bad. Could you just fix things and help us to post even more online?" ‘I can," said Jane. “But it's not quite that simple. I need to set up a new program to make sure that we follow the best practices in data management. And I am concerned for our customers. They should be able to manage how we use their personal information. We also should develop a social media strategy.” Sam and Jane worked hard during the following year. One of the decisions they made was to contract with an outside vendor to manage online sales. At the end of the year, Carol shared some exciting news. “Sam and Jane, you have done such a great job that one of the biggest names in the glass business wants to buy us out! And Jane, they want to talk to you about merging all of our customer and vendor information with theirs beforehand." Which regulator has jurisdiction over the shop's data management practices?
Answer options
A: The Federal Trade Commission. Correct answer
B: The Department of Commerce.
C: The Data Protection Authority.
D: The Federal Communications Commission.
Correct Answer:
A. The Federal Trade Commission.
Explanation

In the United States, the Federal Trade Commission (FTC) is the primary federal agency with jurisdiction over consumer protection, which includes data privacy and security. The FTC uses its authority under Section 5 of the FTC Act to take enforcement action against organizations for "unfair or deceptive acts or practices." Collecting customer data from checks for payment and then using it for marketing without notice or consent, as Sam did, could be considered a deceptive practice. The FTC has broad authority to regulate the data management practices of most commercial entities, like Carol's shop.

Why Incorrect

B. The Department of Commerce is involved in privacy policy and frameworks (e.g., international data transfers) but is not the primary domestic enforcement agency for consumer privacy.
C. A Data Protection Authority (DPA) is the term for the national privacy regulator in the European Union and other jurisdictions with similar comprehensive laws; the U.S. does not have one.
D. The Federal Communications Commission (FCC) has jurisdiction over telecommunications services and broadcast media, not the general data practices of a retail business.

References

1. Federal Trade Commission. Protecting Consumer Privacy and Security. This section of the FTC's official website details its mission and enforcement authority under Section 5 of the FTC Act. (See ftc.gov/business-guidance/privacy-security).

2. Solove, D. J., & Hartzog, W. (2014). The FTC and the New Common Law of Privacy. Columbia Law Review, 114(3), 583-676. This academic article provides a comprehensive analysis of the FTC's role as the de facto chief federal privacy regulator in the U.S.

3. IAPP. (2019). U.S. Private-Sector Privacy: Law and Practice for the CIPP/US (3rd ed.). Chapter 2, "The U.S. Legal and Regulatory System," extensively details the role and authority of the FTC in privacy and data security enforcement. (This is an official IAPP publication, appropriate for exam context).

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