Some of Moodle's default functionality might infringe legislative privacy or data protection regulations in the country you operate Moodle in or the rules of the organization for which the VLE is run. As different organizations are obliged to follow different guidelines, for example, FERPA in the United States, we are only able to point you in the direction of some of the most common issues, and how to resolve them in Moodle.
The key issue is to protect personal information in educational records. Examples of such data are: personal details, grades, usage data (as described in Chapter 10, Moodle Reporting), and notes by teachers about students.
Some regulations prescribe what information about users is allowed to be stored, with or without their consent:
Logfiles: You cannot prevent Moodle from keeping a track of any user activities, but you have the ability to prevent reports from accessing this data. We have listed all the relevant capabilities...