With the June 9th deadline to comply with the Federal Trade Commission’s (FTC) Safeguards Rule, it’s important that auto, marine, RV, and powersports dealerships as well as financial services industries are ready. The Safeguards Rule requires these businesses to implement measures to keep customer information secure, and the fines for violation can be steep.
What is the FTC Safeguards Rule? The FTC Safeguards Rule is a federal regulation from 2003 that requires all financial institutions in the US to develop policies and procedures for protecting customer information. This includes any personal data such as credit card numbers, social security numbers, or bank account information. Financial institutions must also have measures in place for detecting and responding to unauthorized access or misuse of this data.
Why Does It Apply to Dealers? Auto, marine, RV, and powersports dealers were added to the list of financial institutions subject to this rule back in July 2013 when they were included in the definition of “creditors” under the FairCredit Reporting Act (FCRA).
While dealerships were initially given a grace period to comply with these rules, that grace period is coming to an end June 9, 2023. This means dealerships must have the necessary security measures in place by then, or they risk facing significant financial penalties and damage to their reputation. Violations can result in monetary penalties for each incident plus attorney fees and other costs associated with defending an enforcement action by regulators.
What Needs to Be Done Before June 9th? To comply with these regulations, dealerships should ensure they can fulfill three specific obligations:
Administrative — Ensure the security and confidentiality of consumer information.
Physical — Prevent unauthorized access to consumer information that could result in harm or inconvenience to any consumer.
Technical — Protect against anticipated threats or hazards to the security or integrity of that information.
It is essential that dealerships comply with the FTC Safeguards Rule before June 9th in order avoid hefty fines and lawsuits due violations. Taking proactive steps now can...