Buckle up auto dealers - on October 27th, 2023, the Federal Trade Commission made an additional amendment to its recently updated Safeguards Rule surrounding reporting. Here’s what you need to know about it.
Under this new amendment part of the FTC Safeguards Rule, dealerships must report breaches of unencrypted data affecting at least 500 consumers to the FTC within 30 days. This deliberately low benchmark should illustrate the FTC's strong stance on data privacy.
It might seem redundant in addition to the state and local requirements for breach notifications. But this new requirement takes it a step further. Instead of only being accountable to more local municipalities, breaches will now be held to a federal standard and face federal consequences.
With this notification, the FTC will launch an investigation into the dealership’s data security practices and compliance with the established Safeguards Rule.
You can find the rest of the official wording by the FTC here.
The latest amendment casts a spotlight on the term 'unencrypted,' emphasizing the critical role of encryption in safeguarding customer data. In the eyes of the FTC, encryption is no longer just a best practice; it’s the industry standard defense against data breaches. Financial institutions that have not implemented encryption measures for sensitive customer information will now find themselves in a precarious position, facing the risk of reporting breaches and attracting unwanted federal scrutiny.
This development sends a clear message to all non-banking financial entities: the security of customer data comes first.
The new rule requires more than just reporting a breach - companies need to have a plan ready to provide a complete picture of the incident. This is so the FTC can fully understand what happened and how severe it is.
Companies must give the FTC key details about the breach, including:
Having all these details helps the FTC figure out how serious the breach is and how much danger customers might be in. This allows the FTC to respond more effectively and know if the company followed proper security rules.
Ignoring the amendment's requirements is not an option for financial institutions. Failure to follow the new reporting rules can really hurt a company. If they don't report a qualifying breach to the FTC within 30 days, here's what could happen:
Having a breach made public can start a snowball of problems, including:
So if companies don't report major breaches on time, it can seriously impact their business, finances, and public image. The risks of ignoring the rules are just too high.
In short, companies need to report qualifying breaches to the FTC within 30 days. If they don't, they could face major backlash and penalties on multiple fronts.
The countdown to compliance begins the moment the amendment is officially published in the Federal Register. Companies will have 180 days to update their policies, processes, and security tools to follow the new requirement.
To get ready for the change, companies should take these steps:
This change is more than just a new regulation - it's a wake-up call for companies to step up security and be ready to respond quickly to breaches. As cyber threats get more advanced, FTC-designated “financial institutions” need to both safeguard customer data and be transparent if a breach does occur.
Being proactive now and committing to strong security will be key for both following the new rules and keeping customer trust. For more guidance, companies can visit the FTC's website or talk to a legal expert about the Safeguards Rule.
When it comes to robust data protection, there is no one-size-fits-all solution. Rather, organizations require a diverse set of security tools to build a comprehensive defense. Perimeter security solutions like firewalls create an essential outer barrier, while data-centric tools like encryption provide inner control to protect information directly. Between these layers, technologies like access management, anomaly detection, and data loss prevention help cover gaps.
Just as IT administrators leverage different applications to meet various business needs, security teams must utilize multiple technologies in tandem to address evolving threats. By weaving together complementary solutions for network security, endpoint protection, access control, and data-level encryption, companies can stitch together a quilt of defense that delivers true depth. With cyber risks on the rise, a single-point product is no longer enough; organizations must embrace multi-layered strategies to keep data truly safe.
As cyberthreats continue to evolve, financial institutions must take a proactive and multilayered approach to data security. While perimeter defenses like firewalls remain vital, organizations should also implement data-centric security measures that protect sensitive information directly. By encrypting data at the file level using industry-standard encryption protocols, companies can ensure customer data remains secure, even if their network is breached. Solutions like Virtru not only provide robust encryption to lock down files and emails, but also help organizations comply with regulations like the FTC Safeguards Rule.
For example, when the rule expanded, Kunes Auto Group worked quickly to deploy Virtru email encryption and Data Protection Gateway to fulfill the new encryption requirements. Even though the change initially faced internal resistance, Kunes' IT team persistently educated employees on the growing need for encryption. As Kunes IT specialist Ralph Rasmussen explained, "You've got to go [Virtru email] and Gateway both, because you've got to have a backup plan." With Virtru's set-and-forget encryption integrated into workflows, financial institutions like Kunes can monitor and control sensitive data in motion and at rest, while seamlessly generating logs to demonstrate compliance. By supplementing perimeter defenses with always-on data encryption from Virtru, financial institutions can defend against modern cyberthreats and readily comply with evolving regulations.
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