Are you aware that if your business falls within Federal Trade Commissions’ definition of a “financial institution” that you must comply with the updated requirements of the FTC Safeguards Rule by June 9, 2023? The Rule authorizes the FTC to impose fines for non-compliance with a maximum civil penalty of up to $46,517.
Well, if your business is engaged in a business that is “financial in nature”, chances are your business fits within the legal definition. The definition states that a business is a financial institution if it is “engaging in an activity that is financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. 1843(k)”.
Quick disclaimer, we’re not attorneys, and you should definitely seek counsel on this if you think it applies to you. But in plain English, businesses such as mortgage brokers, motor vehicle dealers, and payday lenders are required to comply. Other types of businesses include account servicers, check cashers, wire transferors, travel agencies operated in connection with financial services, collection agencies, credit counselors and other financial advisors, tax preparation firms, and non-federally insured credit unions.
The rule requires financial institutions covered by the rule to develop, implement, and maintain an information security program with administrative, technical, and physical safeguards to protect customer information. More specifically, the rule requires businesses to:
The good news is that there are tools and resources in the marketplace to help businesses become compliant, especially within the automobile dealers industry.
If you need assistance with evaluating your current level of compliance and how to maintain it, we can help!