The FTC Safeguards Rule is a federal regulation to protect consumer’s personal information from data breaches and cyber-attacks. The rule applies to various businesses, including dealerships, that collect, maintain, or store personal information about their customers.
With the deadline for Safeguards compliance fast approaching on June 9th, 2023, dealerships must understand what the rule entails and what non-compliance can mean for their bottom line. While Safeguards Compliance penalties can be a financial burden, it’s only the tip of the iceberg compared to a cyber attack’s potential financial fallout.
What is the FTC Safeguards Rule?
The FTC Safeguards Rule is a regulation designed to protect consumers’ personal information from unauthorized access, use, and disclosure. The rule requires businesses to develop and maintain a written information security program (WISP) that outlines the measures they will take to protect personal information.
The rule applies to various businesses, including dealerships, that collect, maintain, or store personal information about their customers. Personal information can include names, addresses, social security numbers, credit card numbers, and other sensitive information.
Understand The Basic Requirements of the FTC Safeguards Rule
Under the FTC Safeguards Rule, businesses must implement specific requirements to protect personal information, including:
- Develop a written information security program (WISP) outlining the dealership’s measures to protect personal information.
- Designate an employee or employees to coordinate the WISP.
- Conduct a risk assessment to identify potential threats to personal information and assess the sufficiency of current safeguards.
- Implement safeguards to control the risks identified in the risk assessment, such as employee training programs, access controls, and secure data storage.
- Regularly monitor and test the effectiveness of safeguards and adjust the WISP as necessary.
Failure to comply with the FTC Safeguards Rule can result in Safeguards Compliance penalties, including fines and legal action.
Are there Safeguards Compliance Penalties If You’re Not Compliant by The Deadline?
Safeguards Compliance penalties can be severe, carrying financial costs and reputational damage for dealerships in non-compliance. The FTC can impose fines of up to $43,280 per violation for non-compliance with the Safeguards Rule, which can add up quickly if multiple violations occur. In addition to penalties, dealerships may face legal action from customers whose personal information is compromised due to a data breach or cyber attack.
Fines Aren’t The Only Potential Outcome of Non-Compliance
However, data breach or cyber attack costs can be even higher. In addition to the direct costs of remediation, such as notifying customers and providing credit monitoring, dealerships may also suffer from reputational damage. Customers may lose trust in the dealership and choose to take their business elsewhere, resulting in lost sales and revenue.
There are numerous examples of dealerships that have suffered from data breaches or cyber-attacks, including a significant dealership group that suffered a data breach that exposed the personal information of millions of customers. The group paid the FTC a $16.5 million settlement and faced legal action from affected customers.
Given the potential Safeguards compliance penalties for non-compliance with the FTC Safeguards Rule, dealerships must take action to protect their customers’ personal information.
How Dealerships Can Achieve Compliance
Dealerships should take a comprehensive approach to data security to ensure compliance with the FTC Safeguards Rule. Here are some practical steps that dealerships can take to protect their customers’ personal information:
- Develop a written information security program (WISP) outlining the dealership’s measures to protect personal information. The WISP should be reviewed and updated regularly to remain current and effective.
- Conduct a risk assessment to identify potential threats to personal information and assess the sufficiency of current safeguards. This assessment should be conducted regularly and updated as needed.
- Implement safeguards to control the risks identified in the risk assessment, such as employee training programs, access controls, and secure data storage. These safeguards should be regularly monitored and tested for effectiveness.
- Work with a cybersecurity firm to ensure the dealership’s network and systems are secure and protected from cyber threats. This includes regular vulnerability scans, penetration testing, and employee training.
- Implement procedures for responding to data breaches and cyber attacks, including notifying affected customers, providing credit monitoring, and working with law enforcement.
By taking these practical steps, dealerships can ensure they comply with the FTC Safeguards Rule and take the necessary measures to protect their customers’ personal information.
Develop a Plan to Protect Your Bottom Line
The FTC Safeguards Rule is necessary to protect consumers’ personal information from data breaches and cyber-attacks. With the deadline for compliance approaching on June 9th, 2023, dealerships must understand the requirements of the rule and take action to ensure compliance. Failure to comply with the regulation can result in significant consequences, including fines and legal action, as well as reputational damage and lost sales. By following the practical steps outlined in this post, dealerships can protect their customers’ personal information and ensure compliance with the FTC Safeguards Rule.
Protecting personal information is a top priority for businesses, particularly those in the automotive, RVs, and boating industries, where customers share sensitive information during the buying process. The FTC Safeguards Rule provides a framework for businesses to protect personal information from data breaches and cyber-attacks. Dealerships must comply with the rule to avoid Safeguards Compliance penalties.
Not sure where to start? Schedule a free Gap Assessment with In-Telecom. We can help you evaluate your current plans, identify missing pieces and guide you towards compliance.
