FTC Safeguards Rule 2024: Secure Your Data, Secure Your Business

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Understanding the updated FTC Safeguards Rule for non-bank financial institutions

If you’re a non-bank financial institution, you are probably already familiar with the FTC Safeguards rule put in place in October, 2021. However, you may not be familiar with one of the most recent updates to this rule.

First, what is the Safeguards Rule?

If you’re not already familiar, the FTC Safeguards rule states that non-banking financial entities, including mortgage brokers, car dealerships, and payday loan companies, need to establish, execute, and sustain an extensive security strategy to protect their clients’ data. In October, 2021, the FTC confirmed updates to the Safeguards Rule, enhancing the data security measures these financial institutions must implement to secure their customers’ financial information.  

The latest amendment

In addition to the previous requirements, on October 27, 2023, the FTC announced non-bank financial institutions must report to the FTC any security breach impacting at least 500 consumers’ data as quickly as possible and no more than 30 days after its discovery. This notification is especially necessary when unencrypted customer data is accessed without the consent of the person it belongs to. The report to the FTC must include specific details about the incident, such as the estimated number of consumers affected.

This requirement to notify about breaches will be enforced after May 13, 2024 which is 180 days following the rule’s publication in the Federal Register.

Why does this amendment matter?

The recent amendment to the FTC Safeguards Rule amplifies enhanced trust and uniformity in data security practices at non-bank financial institutions. Adherence to this updated rule demonstrates a robust commitment to protecting data and propels a more consistent approach to data security across various financial sectors. However, this amendment presents certain challenges. Implementing these changes may necessitate operational adjustments within institutions. Additionally, they must carefully balance the need for transparency with the risk of exposing vulnerabilities or potentially compromising ongoing investigations.

The FTC’s update to the Safeguards Rule is a significant step towards better protecting customer information in the financial sector, especially for non-bank institutions. Ensuring effective handling and reporting of data breaches provides assurance that financial information is in safe hands.

Staying ahead of regulatory changes is not just about avoiding penalties—it’s about protecting your reputation and securing your customers’ trust. The updated FTC Safeguards Rule outlines critical steps that non-bank financial institutions must take to safeguard customer information. But understanding these requirements and integrating them into your business practices can be complex.

Back To Business IT has developed a comprehensive Compliance Checklist for the updated October 2023 FTC Safeguards Rule to help you navigate these changes with confidence. Our checklist is designed to ensure that you don’t miss a single step in your journey to full compliance.

Don’t leave your compliance to chance. Download the Back To Business IT Compliance Checklist today and start implementing the necessary safeguards to secure your customer data and maintain your competitive edge.

Visit our resources page now to get your copy of the checklist and learn more about our tailored IT solutions that keep your business ahead of the curve.

  1. Federal Trade Commission – Safeguards Rule Update.
  2. FTC Safeguards Rules

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