As a business, staying updated with regulatory changes is not just advisable—it’s essential. The Federal Trade Commission (FTC) has updated its Safeguards Rule last June, which could have a huge impact on your business. 

This post can help you navigate through these changes with our comprehensive FTC Safeguards Guide.

This blog post provides a high-level overview of the rule and its key requirements. However, for a more in-depth analysis and practical guidance on achieving compliance, download our free CorCystems FTC Safeguards Guide:

What is the new FTC Safeguards Rule?

The Federal Trade Commission (FTC) recently announced a significant amendment to the Safeguards Rule. This amendment expands the scope of the rule to encompass a wider range of businesses, specifically non-banking financial institutions. It states:

“The Federal Trade Commission has approved an amendment to the Safeguards Rule that would require non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to report certain data breaches and other security events to the agency.” 

Previously, the Safeguards Rule primarily focused on traditional financial institutions like banks and credit unions. However, the new amendment casts a broader net, bringing a variety of non-banking financial institutions under its umbrella.

Who Now Falls Under the FTC Safeguards Rule

This is where things get interesting for many businesses. Since this is such a major change, and it’s crucial for businesses to understand if they now fall under the FTC Safeguards Rule. Here are some of the key business types now required to comply:

• Mortgage Brokers and Lenders: Businesses that facilitate or originate home loans are now subject to the rule’s data security requirements.
• Motor Vehicle Dealerships: Companies selling cars, trucks, and other motor vehicles must now implement safeguards to protect customer financial information.
• Payday Lenders: Short-term loan providers must adhere to the rule’s data security protocols.
• Account Servicers: Businesses that manage customer accounts and financial transactions are included in the expanded scope.
• Tax Preparation Firms: Companies that prepare tax returns for clients must now comply with the data security standards.
• Real Estate Appraisers: Professionals who assess property values for financial transactions are subject to the rule.
• Check Cashers: Businesses that convert checks into cash must now implement data security measures.

This list is not exhaustive, and other non-banking financial institutions may also be covered under the amended rule. 

Remember: The key takeaway is that businesses that handle customer financial information should carefully review the FTC’s guidance to determine their compliance obligations.

Why This Matters for Your Business

As mentioned above, the inclusion of these non-banking financial institutions reflects the evolving nature of the financial services industry. Today, customer financial data often extends beyond traditional banks and credit unions. By expanding the scope of the Safeguards Rule, the FTC aims to strengthen data security protections for consumers across a broader spectrum of financial activities.

But the impact of the FTC Safeguards Rule isn’t limited to financial institutions alone. Here’s why this update should be on your radar, regardless of your industry:

1. Expanded Definition of Financial Institutions: The new rule broadens the scope of businesses that qualify as financial institutions. This means your company, even if not traditionally considered financial services, could potentially fall under the rule if you engage in activities related to consumer finance.
2. Enhanced Security Measures: The amendment introduces stricter requirements for data security practices. This includes stronger data encryption, more robust access controls, and comprehensive risk assessments. These enhanced security measures are essential for protecting sensitive consumer information across all industries.
3. Accountability and Enforcement: With more rigorous enforcement measures in place, the FTC is sending a clear message: businesses must prioritize compliance.  Non-compliance can lead to legal and financial repercussions, making it crucial to understand your obligations under the updated rule.

Even if your business doesn’t directly handle financial data, it’s still wise to stay informed about the FTC Safeguards Rule. The broader definition of financial institutions and the emphasis on robust data security practices can have implications for businesses in various sectors.

FTC Safeguards Guide: Your Roadmap to Compliance

At CorCystems, we understand the importance of compliance and security. That’s why we’ve developed the FTC Safeguards Guide, your roadmap to compliance. Our comprehensive guide dives deeper into the FTC Safeguards Rule, providing a step-by-step approach to implementing a compliant information security program. It includes:

• Detailed explanations of each safeguard requirement
• Practical tips for implementation
• Best practices for data security

Let us help you keep your business safe and ahead of regulatory changes. Download the CorCystems FTC Safeguards Guide today!