The answer is sensitivity labels with auto-labeling. This Microsoft Purview solution is correct because it enables a compliance administrator to create an auto-labeling policy that automatically detects sensitive data types, such as credit card numbers, and then applies the appropriate sensitivity label to classify and encrypt the document in SharePoint Online. On the SC-900 exam, this question tests your understanding of Microsoft Purview Information Protection versus other solutions; a common trap is confusing auto-labeling with Data Lifecycle Management, which handles retention and deletion, not automatic encryption. Remember that auto-labeling is about proactive protection—it scans content in transit or at rest and applies labels based on conditions you define. A helpful memory tip: think of “auto-labeling” as the “automatic protector” that both classifies and encrypts, while other tools like Communication Compliance only monitor, and Entra ID only manages identities.
SC-900 Practice Question: Describe the capabilities of Microsoft compliance solutions
This SC-900 practice question tests your understanding of describe the capabilities of microsoft compliance solutions. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company wants to automatically classify and protect sensitive documents stored in SharePoint Online. The compliance administrator needs to create a policy that detects credit card numbers and applies encryption. Which Microsoft Purview solution should the administrator use?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Sensitivity labels with auto-labeling
Sensitivity labels with auto-labeling in Microsoft Purview Information Protection can automatically classify and encrypt documents containing sensitive data like credit card numbers. Data Lifecycle Management (formerly retention) focuses on retention and deletion, not automatic protection. Communication Compliance monitors communications for policy violations. Microsoft Entra ID is an identity service.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✗
Communication Compliance
Why it's wrong here
Communication Compliance monitors communications for compliance, not document classification.
✓
Sensitivity labels with auto-labeling
Why this is correct
Sensitivity labels with auto-labeling can automatically classify and encrypt documents based on sensitive content.
Related concept
Read the scenario before looking for a memorised answer.
✗
Microsoft Entra ID
Why it's wrong here
Microsoft Entra ID is an identity and access management service, not a compliance solution for document protection.
✗
Data Lifecycle Management
Why it's wrong here
Data Lifecycle Management manages retention and deletion, not automatic classification and encryption.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
Use explanations to understand the rule behind the answer.
TExam Day Tips
→Underline the problem statement mentally.
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this SC-900 question in full detail.
Identify which SC-900 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Describe the capabilities of Microsoft compliance solutions — This question tests Describe the capabilities of Microsoft compliance solutions — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Sensitivity labels with auto-labeling — Sensitivity labels with auto-labeling in Microsoft Purview Information Protection can automatically classify and encrypt documents containing sensitive data like credit card numbers. Data Lifecycle Management (formerly retention) focuses on retention and deletion, not automatic protection. Communication Compliance monitors communications for policy violations. Microsoft Entra ID is an identity service.
What should I do if I get this SC-900 question wrong?
Identify which SC-900 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A healthcare organization needs to automatically classify documents containing patient health information (PHI) in Microsoft SharePoint. The solution should apply a 'Confidential - Healthcare' sensitivity label to any document that matches the HIPAA content pattern. Which Microsoft Purview feature should be used?
easy
A.Retention label auto-apply
B.Manual sensitivity labeling
C.Data loss prevention (DLP) policy
✓ D.Auto-labeling for sensitivity labels
Why D: Option B is correct because auto-labeling in Microsoft Purview can apply sensitivity labels based on content patterns. Option A is wrong because manual labeling requires user action. Option C is wrong because DLP policies prevent sharing, not classify. Option D is wrong because retention labels manage retention, not classification.
Variation 2. A financial services organization needs to automatically classify and protect sensitive documents containing credit card information in SharePoint Online and OneDrive for Business. They want a purple-colored label to be applied automatically when the document is saved, and the document should be encrypted with a predefined template that restricts editing to internal users only. Which Microsoft Purview solution should they configure?
hard
✓ A.Sensitivity labels with auto-labeling
B.Data Loss Prevention (DLP) policies
C.Data Lifecycle Management (retention labels)
D.Audit (Unified Auditing)
Why A: Sensitivity labels with auto-labeling in Microsoft Purview can automatically apply a purple-colored label to documents containing credit card information when saved in SharePoint Online or OneDrive for Business. This label can be configured with encryption using a predefined template that restricts editing to internal users only, meeting the organization's classification and protection requirements.
Last reviewed: Jun 21, 2026
Question Discussion
Share a tip, memory trick, or ask about the reasoning behind this question. Do not post real exam questions, leaked content, braindumps, or copyrighted exam material. Comments are moderated and may be removed without notice.
This SC-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the SC-900 exam.
Question Discussion
Share a tip, memory trick, or ask about the reasoning behind this question. Do not post real exam questions, leaked content, braindumps, or copyrighted exam material. Comments are moderated and may be removed without notice.
Sign in to join the discussion.