Pass the IAPP Certified Information Privacy Professional CIPP-E Questions and answers with ExamsMirror

 According to the GDPR, personal data must be collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes1. This means that data controllers must inform data subjects about the purposes of data processing and obtain their consent or rely on another lawful basis for processing. Data controllers must also respect the principle of data minimisation, which means that they should only collect and process personal data that is adequate, relevant and limited to what is necessary for the purposes for which they are processed2.

In the scenario, Brady transfers his customers’ personal data to Hermes Designs, a third-party contractor, for the purpose of providing web page design services. However, Hermes Designs uses the data for a new purpose, which is creating sample customized banner advertisements and conducting direct marketing to the customers. This new purpose is not compatible with the original purpose for which the data was collected and transferred, and it is not likely that the customers have consented to it or that there is another lawful basis for it. Moreover, Hermes Designs may be processing more personal data than what is necessary for the original purpose, such as the customers’ business plans and preferences. Therefore, Brady should be concerned with Hermes Designs’ handling of customer personal data, as it may violate the GDPR and expose him to legal risks and reputational damages.

References:

1: Art. 5(1)(b) GDPR Principles relating to processing of personal data

2: Art. 5(1)© GDPR Principles relating to processing of personal data

The GDPR applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not1. This means that the GDPR applies to any controller or processor that has a branch, office, subsidiary, or other stable arrangement in the EU, even if the data processing occurs outside the EU. However, the GDPR also applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to: (a) the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or (b) the monitoring of their behaviour as far as their behaviour takes place within the Union1. This means that the GDPR applies to any controller or processor that targets or tracks EU data subjects, even if they do not have a presence in the EU. In this case, the website operator is not required to comply with the GDPR because it does not have an establishment in the EU (option B), and it does not offer goods or services or monitor the behaviour of EU data subjects. The website operator reports primarily on North American events, does not block connections from outside the U.S., and only accepts payments in U.S. dollars, which indicate that it does not intend to target or track EU data subjects. Therefore, option B is the correct answer. References: Art. 3 GDPR – Territorial scope, Guidelines 3/2018 on the territorial scope of the GDPR (Article 3), [What does territorial scope mean under the GDPR?]

The GDPR and the Convention 108 are two important data protection instruments that aim to protect the rights and freedoms of individuals with regard to their personal data. They both have some similarities and some differences, but one common feature is that they both require notification of processing activities to a supervisory authority.

A supervisory authority is an independent public body that monitors and enforces compliance with data protection laws. In the EU, there are 47 national data protection authorities (DPAs) that have the power to impose administrative fines, issue guidelines, conduct investigations, and cooperate with other authorities1. In the Council of Europe, there are 54 parties to the Convention 108 that have established their own supervisory authorities or have agreed to be supervised by an external authority2.

Notification of processing activities is a requirement for any controller or processor of personal data that falls under the scope of the GDPR or the Convention 108. A controller is a natural or legal person who determines the purposes and means of the processing of personal data3. A processor is a natural or legal person who processes personal data on behalf of a controller3. Notification means informing the supervisory authority about certain aspects of the processing, such as:

The identity and contact details of the controller and processor

The categories and sources of personal data

The purposes and legal basis for processing

The recipients or categories of recipients of personal data

The retention period or criteria for determining it

The existence of any automated decision-making or profiling

The rights of data subjects and how they can exercise them

Notification can be done in various ways, such as:

Submitting a written notification form

Publishing a notice on a website or other platform

Sending an email or other electronic message

Using an online system or portal

Notification should be done as soon as possible after becoming aware of any relevant information about the processing. It should also be updated whenever there are significant changes in relation to the processing4.

Therefore, both the GDPR and the Convention 108 require notification of processing activities to a supervisory authority. This is one way to ensure transparency, accountability, and compliance with data protection laws.

According to the GDPR, legitimate interest is one of the possible legal bases for processing personal data, which means that the data controller has a valid reason to process the data that is not overridden by the interests or rights of the data subject1. The GDPR specifically mentions fraud prevention as a potential legitimate interest of the data controller, as it serves both the interests of the online shop and the data subjects who may be victims of fraud1. However, the data controller must conduct a balancing test to ensure that the legitimate interest is not outweighed by the potential harm or intrusion to the data subject’s privacy1. The data controller must also provide clear and transparent information to the data subject about the processing of their data for fraud prevention purposes, and respect their right to object to such processing1.

The other options are incorrect because:

A. Protection of the interests of the data subjects is not a legal basis for processing personal data, but rather a condition for processing special categories of personal data under Article 9 of the GDPR2. Moreover, fraud prevention does not necessarily protect the interests of the data subjects, but rather the interests of the online shop and the general public.

B. Performance of a contract is a legal basis for processing personal data that is necessary for the execution or fulfilment of a contract between the data controller and the data subject2. However, fraud prevention is not strictly necessary for the performance of a contract, as it is not directly related to the delivery of goods or services that the data subject has purchased from the online shop.

D. Consent is a legal basis for processing personal data that requires the data subject to give their informed, specific, and freely given agreement to the processing of their data for one or more purposes2. However, consent is not the most appropriate legal basis for fraud prevention, as it may not be freely given by the data subject, who may feel pressured to agree to the processing of their data in order to complete their purchase. Moreover, consent may not be reliable or effective for fraud prevention, as it can be withdrawn by the data subject at any time, or may be given by a fraudster who is not the legitimate owner of the data.

References: 2 Article 6 and 9 of the GDPR1 Legitimate interests | ICO1.

You have just been hired by a toy manufacturer based in Hong Kong. The company sells a broad range of dolls, action figures and plush toys that can be found internationally in a wide variety of retail stores. Although the manufacturer has no offices outside Hong Kong and in fact does not employ any staff outside Hong Kong, it has entered into a number of local distribution contracts. The toys produced by the company can be found in all popular toy stores throughout Europe, the United States and Asia. A large portion of the company’s revenue is due to international sales.

The company now wishes to launch a new range of connected toys, ones that can talk and interact with children. The CEO of the company is touting these toys as the next big thing, due to the increased possibilities offered: The figures can answer children’s Questions: on various subjects, such as mathematical calculations or the weather. Each figure is equipped with a microphone and speaker and can connect to any smartphone or tablet via Bluetooth. Any mobile device within a 10-meter radius can connect to the toys via Bluetooth as well. The figures can also be associated with other figures (from the same manufacturer) and interact with each other for an enhanced play experience.

When a child asks the toy a question, the request is sent to the cloud for analysis, and the answer is generated on cloud servers and sent back to the figure. The answer is given through the figure’s integrated speakers, making it appear as though that the toy is actually responding to the child’s question. The packaging of the toy does not provide technical details on how this works, nor does it mention that this feature requires an internet connection. The necessary data processing for this has been outsourced to a data center located in South Africa. However, your company has not yet revised its consumer-facing privacy policy to indicate this.

In parallel, the company is planning to introduce a new range of game systems through which consumers can play the characters they acquire in the course of playing the game. The system will come bundled with a portal that includes a Near-Field Communications (NFC) reader. This device will read an RFID tag in the action figure, making the figure come to life onscreen. Each character has its own stock features and abilities, but it is also possible to earn additional ones by accomplishing game goals. The only information stored in the tag relates to the figures’ abilities. It is easy to switch characters during the game, and it is possible to bring the figure to locations outside of home and have the character’s abilities remain intact.

Why is this company obligated to comply with the GDPR?

A. The company has offices in the EU. B. The company employs staff in the EU. C. The company’s data center is located in a country outside the EU. D. The company’s products are marketed directly to EU customers.

Answer:

Verified Answer: D. The company’s products are marketed directly to EU customers.

 According to section 6(1)© of the GDPR1, personal data shall be processed by organisations, which offer goods or services or otherwise carry out activities, in relation to which processing of personal data may be regarded as relevant for their legitimate interests. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance of a task carried out in their name or on their behalf, or for their own purposes. The legitimate interests referred to are those arising from the performance

One of the main differences between a Regulation and a Directive in the EU law is that a Regulation is directly applicable and binding in all EU member states, without the need for national implementing measures, while a Directive sets out the objectives and principles that the member states must achieve, but leaves them the choice of form and methods to transpose it into their national laws. Therefore, by taking the form of a Regulation, the GDPR aims to harmonize and unify the data protection rules across the EU, and to ensure a consistent implementation and enforcement of the data protection laws throughout the EU. The other aspects of the GDPR listed in the question, such as the one-stop shop mechanism, the mandatory notification of large-scale data breaches, and the mandatory appointment of a data protection officer, are also important features of the GDPR, but they do not have the same impact on the consistency of the data protection laws as the form of a Regulation.

References: Difference between A Regulation And Directive (European Law)1; EUR-Lex - 310401_2 - EN - EUR-Lex2; EU GDPR vs. European Data Protection Directive 95/46/EC - Advisera3; Difference between GDPR and Data Protection Directive - Profolus

According to the GDPR, consent is one of the six lawful bases for processing personal data, but not the only one. The other five are: contract, legal obligation, vital interests, public task and legitimate interests. Legitimate interests can be invoked by controllers who process personal data for their own benefit or for the benefit of third parties, as long as such processing does not override the rights and freedoms of the data subjects, especially if they are children. The GDPR also recognizes that processing personal data for journalistic purposes or the purposes of academic, artistic or literary expression may be necessary for the exercise of the right to freedom of expression and information, which is a legitimate interest. Therefore, the company may not need to obtain the consent of everyone whose image they use for their documentary, if they can demonstrate that their processing is necessary for the purposes of their journalistic, artistic or literary expression, and that they have taken into account the reasonable expectations of the data subjects and the potential impact on their privacy. The company should also comply with any relevant national laws or codes of conduct that may apply to such processing. References:

GDPR, Article 6(1)(a)-(f)

GDPR, Recital 47

GDPR, Article 85

According to Article 14 of the GDPR, where personal data is not obtained directly from the data subject, the controller must provide the data subject with certain information about the processing, such as the identity of the controller, the purposes and legal basis of the processing, the categories of personal data concerned, the recipients or categories of recipients of the personal data, and the rights of the data subject12. However, there are some exceptions to this obligation, as specified in Article 14(5). One of them is when the provision of such information proves impossible or would involve a disproportionate effort, in particular for processing for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes, subject to the conditions and safeguards referred to in Article 89(1) or in so far as the obligation is likely to render impossible or seriously impair the achievement of the objectives of that processing12. In such cases, the controller must take appropriate measures to protect the data subject’s rights and freedoms and legitimate interests, including making the information publicly available12. References: CIPP/E Certification - International Association of Privacy Professionals, Free CIPP/E Study Guide - International Association of Privacy Professionals, GDPR - EUR-Lex, Right to be Informed - General Data Protection Regulation (GDPR)

According to the General Data Protection Regulation (GDPR), a data processor is a natural or legal person, agency, public authority, or any other body who processes personal data on behalf of a data controller. A data controller is a natural or legal person, agency, public authority, or any other body who, alone or jointly with others, determines the purposes and means of the processing of personal data. The GDPR imposes specific obligations and responsibilities on both data controllers and data processors, and requires them to enter into a written contract or other legal act that sets out the subject matter, duration, nature, and purpose of the processing, as well as the obligations and rights of the data controller.

In this scenario, BHealthy is the data controller, as it determines the purpose and means of collecting and sharing its customer information with Natural Insight. Natural Insight is the data processor, as it processes the customer information on behalf of BHealthy for the purpose of determining the price point for BHealthy’s new sunscreens. However, Natural Insight also intends to use the customer information for its own purpose of improving its algorithms, which may not be aligned with BHealthy’s purpose or instructions. This may constitute a breach of the data processing contract and the GDPR, as the data processor must only process the personal data on documented instructions from the data controller, unless required to do so by EU or member state law (Article 28(3)(a) of the GDPR).

Therefore, the only case in which Natural Insight’s use of BHealthy’s data for improvement of its algorithms would be considered data processor activity is if Natural Insight receives express contractual instructions from BHealthy to use its data for improving its algorithms. This would mean that BHealthy has given its consent and authorization for Natural Insight to process the data for that specific purpose, and that Natural Insight is acting in accordance with BHealthy’s instructions. In this case, Natural Insight would still be bound by the data processing contract and the GDPR, and would have to comply with the other obligations and requirements of a data processor, such as ensuring the security of the data, respecting the conditions for engaging another processor, assisting the data controller in ensuring compliance with the GDPR, and deleting or returning the data to the data controller after the end of the service.

The other options are not valid cases for data processor activity, as they do not involve the data controller’s instructions or consent. If Natural Insight uses BHealthy’s data for improving price point predictions only for BHealthy, it may still be processing the data for a different purpose than the one for which it was collected and shared, and without BHealthy’s knowledge or approval. If Natural Insight agrees to be fully liable for its use of BHealthy’s customer information in its product improvement activities, it may still be violating the data processing contract and the GDPR, as it is not acting on behalf of the data controller, but for its own benefit. If Natural Insight satisfies the transparency requirement by notifying BHealthy’s customers of its plans to use their information for its product improvement activities, it may still be infringing the data controller’s rights and obligations, as it is not the data controller’s role to inform the data subjects of the processing activities, and it may not have a lawful basis for processing the data for its own purpose.

References:

GDPR

Data Controllers and Processors - GDPR EU

Who does the UK GDPR apply to? | ICO

What Activities Count as Processing Under the GDPR?

What constitutes data processing? - European Commission

The EDPB’s Guidelines 8/2020 on the targeting of social media users explain that the legitimate interest legal basis requires passing three cumulative tests: the purpose test, the necessity test, and the balancing test. The purpose test checks whether there is a legitimate interest pursued by the data controller or a third party. The necessity test checks whether the processing is necessary for the purpose identified. The balancing test checks whether the legitimate interest is not overridden by the interests or rights and freedoms of the data subject. The adequacy test is not one of the three tests required by the legitimate interest legal basis. The adequacy test is relevant for data transfers to third countries, not for data processing within the EU.

References:

EDPB Guidelines 8/2020 on the targeting of social media users, Section 3.2.11

GDPR Article 6(1)(f)2

GDPR Recital 472

IAPP CIPP/E Study Guide, Chapter 3, Section 3.2.23