Free IAPP CIPP-E Practice Exam with Questions & Answers | Set: 5

A U.S. company’s website sells widgets. Which of the following factors would NOT in itself subject the company to the GDPR?

SCENARIO

Please use the following to answer the next question:

Joe started the Gummy Bear Company in 2000 from his home in Vermont, USA. Today, it is a multi-billion-dollar candy company operating in every continent. All of the company’s IT servers are located in Vermont. This year Joe hires his son Ben to join the company and head up Project Big, which is a major marketing strategy to triple gross revenue in just 5 years. Ben graduated with a PhD in computer software from a top university. Ben decided to join his father’s company, but is also secretly working on launching a new global online dating website company called Ben Knows Best.

Ben is aware that the Gummy Bear Company has millions of customers and believes that many of them might also be interested in finding their perfect match. For Project Big, Ben redesigns the company’s online web portal and requires customers in the European Union and elsewhere to provide additional personal information in order to remain a customer. Project Ben begins collecting data about customers’ philosophical beliefs, political opinions and marital status.

If a customer identifies as single, Ben then copies all of that customer’s personal data onto a separate database for Ben Knows Best. Ben believes that he is not doing anything wrong, because he explicitly asks each customer to give their consent by requiring them to check a box before accepting their information. As Project Big is an important project, the company also hires a first year college student named Sam, who is studying computer science to help Ben out.

Ben calls out and Sam comes across the Ben Knows Best database. Sam is planning on going to Ireland over Spring Beak with 10 of his friends, so he copies all of the customer information of people that reside in Ireland so that he and his friends can contact people when they are in Ireland.

Joe also hires his best friend’s daughter, Alice, who just graduated from law school in the U.S., to be the company’s new General Counsel. Alice has heard about the GDPR, so she does some research on it. Alice approaches Joe and informs him that she has drafted up Binding Corporate Rules for everyone in the company to follow, as it is important for the company to have in place a legal mechanism to transfer data internally from the company’s operations in the European Union to the U.S.

Joe believes that Alice is doing a great job, and informs her that she will also be in-charge of handling a major lawsuit that has been brought against the company in federal court in the U.S. To prepare for the lawsuit, Alice instructs the company’s IT department to make copies of the computer hard drives from the entire global sales team, including the European Union, and send everything to her so that she can review everyone’s information. Alice believes that Joe will be happy that she did the first level review, as it will save the company a lot of money that would otherwise be paid to its outside law firm.

In preparing the company for its impending lawsuit, Alice’s instruction to the company’s IT Department violated Article 5 of the GDPR because the company failed to first do what?

SCENARIO

Please use the following to answer the next question:

Jane starts her new role as a Data Protection Officer (DPO) at a Malta-based

company that allows anyone to buy and sell cryptocurrencies via its online platform.

The company stores and processes the personal data of its customers in a

dedicated data center located in Malta (EU).

People wishing to trade cryptocurrencies are required to open an online account on

the platform. They then must successfully pass a Know Your Customer (KYC) due

diligence procedure aimed at preventing money laundering and ensuring

compliance with applicable financial regulations.

The non-European customers are also required to waive all their GDPR rights by

reading a disclaimer written in bold and ticking a checkbox on a separate page in

order to get their account approved on the platform.

All customers must likewise accept the terms of service of the platform. The terms

of service also include a privacy policy section, saying, among other things, that if a

customer fails the KYC process, its KYC data will be automatically shared with the

national anti-money laundering agency.

The KYC procedure requires customers to answer many questions, including

whether they have any criminal convictions, whether they use recreational drugs or

have problems with alcohol, and whether they have a terminal illness. While

providing this data, customers see a conspicuous message saying that this data is

meant only to prevent fraud and account takeover, and will be never shared with

private third parties.

The company regularly conducts external security testing of its online systems by

independent cybersecurity companies from the EU. At the final stage of testing, the

company provides cybersecurity assessors with access to its central database to

review security permissions, roles and policies. Personal data in the database is

encrypted; however, cybersecurity assessors usually have access to the decryption

keys obtained while running initial security testing. The assessors must strictly

follow the guidelines imposed by the company during the entire testing and auditing

process.

All customer data, including trading activities and all internal communications with

technical support, are permanently stored in a secured AWS S3 Glacier cloud data

storage, located in Ireland, for backup and compliance purposes. The data is

securely transferred to the cloud and then is properly encrypted while at rest by

using AWS-native encryption mechanisms. These mechanisms give AWS the

necessary technical means to encrypt and decrypt the data when such is required

by the company. There is no data processing agreement between AWS and the

company.

Should Jane modify the required GDPR rights waiver for non-European residents?

SCENARIO

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Liem, an online retailer known for its environmentally friendly shoes, has recently expanded its presence in Europe. Anxious to achieve market dominance, Liem teamed up with another eco friendly company, EcoMick, which sells accessories like belts and bags. Together the companies drew up a series of marketing campaigns designed to highlight the environmental and economic benefits of their products. After months of planning, Liem and EcoMick entered into a data sharing agreement to use the same marketing database, MarketIQ, to send the campaigns to their respective contacts.

Liem and EcoMick also entered into a data processing agreement with MarketIQ, the terms of which included processing personal data only upon Liem and EcoMick’s instructions, and making available to them all information necessary to demonstrate compliance with GDPR obligations.

Liem and EcoMick then procured the services of a company called JaphSoft, a marketing optimization firm that uses machine learning to help companies run successful campaigns. Clients provide JaphSoft with the personal data of individuals they would like to be targeted in each campaign. To ensure protection of its

clients’ data, JaphSoft implements the technical and organizational measures it deems appropriate. JaphSoft works to continually improve its machine learning models by analyzing the data it receives from its clients to determine the most successful components of a successful campaign. JaphSoft then uses such models in providing services to its client-base. Since the models improve only over a period of time as more information is collected, JaphSoft does not have a deletion process for the data it receives from clients. However, to ensure compliance with data privacy rules, JaphSoft pseudonymizes the personal data by removing identifying

information from the contact information. JaphSoft’s engineers, however, maintain all contact information in the same database as the identifying information.

Under its agreement with Liem and EcoMick, JaphSoft received access to MarketIQ, which included contact information as well as prior purchase history for such contacts, to create campaigns that would result in the most views of the two companies’ websites. A prior Liem customer, Ms. Iman, received a marketing campaign

from JaphSoft regarding Liem’s as well as EcoMick’s latest products. While Ms. Iman recalls checking a box to receive information in the future regarding Liem’s products, she has never shopped EcoMick, nor provided her personal data to that company.

Why would the consent provided by Ms. Iman NOT be considered valid in regard to JaphSoft?

A well-known video production company, based in Spain but specializing in documentaries filmed worldwide, has just finished recording several hours of footage featuring senior citizens in the streets of Madrid. Under what condition would the company NOT be required to obtain the consent of everyone whose image they use for their documentary?

SCENARIO

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The fitness company Vigotron has recently developed a new app called M-Health, which it wants to market on its website as a free download. Vigotron’s marketing manager asks his assistant Emily to create a webpage that describes the app and specifies the terms of use. Emily, who is new at Vigotron, is excited about this task. At her previous job she took a data protection class, and though the details are a little hazy, she recognizes that Vigotron is going to need to obtain user consent for use of the app in some cases. Emily sketches out the following draft, trying to cover as much as possible before sending it to Vigotron’s legal department.

Registration Form

Vigotron’s new M-Health app makes it easy for you to monitor a variety of health-related activities, including diet, exercise, and sleep patterns. M-Health relies on your smartphone settings (along with other third-party apps you may already have) to collect data about all of these important lifestyle elements, and provide the information necessary for you to enrich your quality of life. (Please click here to read a full description of the services that M-Health provides.)

Vigotron values your privacy. The M-Heaith app allows you to decide which information is stored in it, and which apps can access your data. When your device is locked with a passcode, all of your health and fitness data is encrypted with your passcode. You can back up data stored in the Health app to Vigotron’s cloud provider, Stratculous. (Read more about Stratculous here.)

Vigotron will never trade, rent or sell personal information gathered from the M-Health app. Furthermore, we will not provide a customer’s name, email address or any other information gathered from the app to any third- party without a customer’s consent, unless ordered by a court, directed by a subpoena, or to enforce the manufacturer’s legal rights or protect its business or property.

We are happy to offer the M-Health app free of charge. If you want to download and use it, we ask that you

first complete this registration form. (Please note that use of the M-Health app is restricted to adults aged 16 or older, unless parental consent has been given to minors intending to use it.)

First name:

Surname:

Year of birth:

Email:

Physical Address (optional*):

Health status:

*If you are interested in receiving newsletters about our products and services that we think may be of interest to you, please include your physical address. If you decide later that you do not wish to receive these newsletters, you can unsubscribe by sending an email to unsubscribe@vigotron.com or send a letter with your request to the address listed at the bottom of this page.

Terms and Conditions

1.Jurisdiction. […]

2.Applicable law. […]

3.Limitation of liability. […]

Consent

By completing this registration form, you attest that you are at least 16 years of age, and that you consent to the processing of your personal data by Vigotron for the purpose of using the M-Health app. Although you are entitled to opt out of any advertising or marketing, you agree that Vigotron may contact you or provide you with any required notices, agreements, or other information concerning the services by email or other electronic means. You also agree that the Company may send automated emails with alerts regarding any problems with the M-Health app that may affect your well being.

Emily sends the draft to Sam for review. Which of the following is Sam most likely to point out as the biggest problem with Emily’s consent provision?

SCENARIO

Please use the following to answer the next question:

TripBliss Inc. is a travel service company which has lost substantial revenue over the last few years. Their new manager, Oliver, suspects that this is partly due to the company’s outdated website. After doing some research, he meets with a sales representative from the up-and-coming IT company Techiva, hoping that they can design a new, cutting-edge website for TripBliss Inc.’s foundering business.

During negotiations, a Techiva representative describes a plan for gathering more customer information through detailed Questionaires, which could be used to tailor their preferences to specific travel destinations. TripBliss Inc. can choose any number of data categories – age, income, ethnicity – that would help them best accomplish their goals. Oliver loves this idea, but would also like to have some way of gauging how successful this approach is, especially since the Questionaires will require customers to provide explicit consent to having their data collected. The Techiva representative suggests that they also run a program to analyze the new website’s traffic, in order to get a better understanding of how customers are using it. He explains his plan to place a number of cookies on customer devices. The cookies will allow the company to collect IP addresses and other information, such as the sites from which the customers came, how much time they spend on the TripBliss Inc. website, and which pages on the site they visit. All of this information will be compiled in log files, which Techiva will analyze by means of a special program. TripBliss Inc. would receive aggregate statistics to help them evaluate the website’s effectiveness. Oliver enthusiastically engages Techiva for these services.

Techiva assigns the analytics portion of the project to longtime account manager Leon Santos. As is standard practice, Leon is given administrator rights to TripBliss Inc.’s website, and can authorize access to the log files gathered from it. Unfortunately for TripBliss Inc., however, Leon is taking on this new project at a time when his dissatisfaction with Techiva is at a high point. In order to take revenge for what he feels has been unfair treatment at the hands of the company, Leon asks his friend Fred, a hobby hacker, for help. Together they come up with the following plan: Fred will hack into Techiva’s system and copy their log files onto a USB stick. Despite his initial intention to send the USB to the press and to the data protection authority in order to denounce Techiva, Leon experiences a crisis of conscience and ends up reconsidering his plan. He decides instead to securely wipe all the data from the USB stick and inform his manager that the company’s system of access control must be reconsidered.

If TripBliss Inc. decides not to report the incident to the supervisory authority, what would be their BEST defense?

According to the Personal Data Protection Commission's (PDPC) "Guide to basic data anonymization techniques," recently adopted by the Spanish

Data Protection Agency, which of the following is NOT a valid basic anonymization technique?

When does the GDPR provide more latitude for a company to process data beyond its original collection purpose?

SCENARIO

Please use the following to answer the next question:

ProStorage is a multinational cloud storage provider headquartered in the Netherlands. Its CEO. Ruth Brown, has developed a two-pronged strategy for growth: 1) expand ProStorage s global customer base and 2) increase ProStorage's sales force by efficiently onboarding effective teams. Enacting this strategy has recently been complicated by Ruth's health condition, which has limited her working hours, as well as her ability to travel to meet potential customers. ProStorage's Human Resources department and Ruth's Chief of Staff now work together to manage her schedule and ensure that she is able to make all her medical appointments The latter has become especially crucial after Ruth's last trip to India, where she suffered a medical emergency and was hospitalized m New Delhi Unable to reach Ruths family, the hospital reached out to ProStorage and was able to connect with her Chief of Staff, who in coordination with Mary, the head of HR. provided information to the doctors based on accommodate on requests Ruth made when she started a: ProStorage

In support of Ruth's strategic goals of hiring more sales representatives, the Human

Resources team is focused on improving its processes to ensure that new

employees are sourced, interviewed, hired, and onboarded efficiently. To help with

this, Mary identified two vendors, HRYourWay, a German based company, and

InstaHR, an Australian based company. She decided to have both vendors go

through ProStorage's vendor risk review process so she can work with Ruth to

make the final decision. As part of the review process, Jackie, who is responsible

for maintaining ProStorage's privacy program (including maintaining controller

BCRs and conducting vendor risk assessments), reviewed both vendors but

completed a transfer impact assessment only for InstaHR. After her review of both

vendors, she determined that InstaHR satisfied more of the requirements as it

boasted a more established privacy program and provided third-party attestations,

whereas HRYourWay was a small vendor with minimal data protection operations.

Thus, she recommended InstaHR.

ProStorage's marketing team also worked to meet the strategic goals of the

company by focusing on industries where it needed to grow its market share. To

help with this, the team selected as a partner UpFinance, a US based company

with deep connections to financial industry customers. During ProStorage's

diligence process, Jackie from the privacy team noted in the transfer impact

assessment that UpFinance implements several data protection measures

including end-to-end encryption, with encryption keys held by the customer.

Notably, UpFinance has not received any government requests in its 7 years of

business. Still, Jackie recommended that the contract require UpFinance to notify

ProStorage if it receives a government request for personal data UpFinance

processes on its behalf prior to disclosing such data.

What transfer mechanism should Jackie recommend for using InstaHR?