As per the cybersecurity market indicator, the estimated cost of cybercrime is expected to rise by US$5.7 trillion in total from 2023-28 (Source).
This is because millions of data records are compromised worldwide every day, making personal information more vulnerable than ever. This is where safeguarding the digital identity of consumers is not a choice but a necessity. The Federal Trade Commission’s (FTC) Safeguards Rule stands as a beacon of protection in such a vivid cybersecurity landscape.
The mere mention of regulations sends shivers down their spine to many business owners. However, we’re here to demystify the Safeguards Rule and make it as digestible as your morning coffee. In this deep dive, we’ll answer burning questions you may have about securing your sensitive data around this Rule.
Top 7 FAQs You Might Want to Ask About FTC Safeguards Rule
What does FTC stand for?
FTC stands for the Federal Trade Commission. It is a U.S. government agency that is tasked with protecting consumers and promoting fair business practices. Besides this, it also plays a pivotal role in enforcing various laws, including those related to consumer privacy and data security.
What can be reported to the FTC?
The FTC encourages reporting on a broad spectrum of consumer protection issues, including scams, identity theft, deceptive practices, and unfair competition. Additionally, you can file a report with the Federal Trade Commission Office of the Inspector General (OIG) if you come across:
- Misconduct by an FTC employee
- Fraudulent activities involving entities contracting with or benefiting from the FTC
- Evidence of significant waste, abuse, or mismanagement within the FTC itself
This mechanism ensures accountability and upholds the standards of legality and ethical conduct within the FTC (Source).
Who is covered under the FTC Safeguards Rule?
The FTC Safeguards Rule applies to financial institutions within the jurisdiction of the FTC, excluding those under the enforcement authority of another regulator as per section 505 of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6805.
According to Section 314.1(b), a covered ‘financial institution’ engages in activities deemed ‘financial in nature’ or ‘incidental to such financial activities’ as outlined in section 4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. § 1843(k).
This nuanced definition ensures that various financial entities fall under the regulatory umbrella, promoting comprehensive data security across the financial sector.
What does the FTC Safeguards Rule require companies to do?
The FTC Safeguards Rule necessitates the covered financial institutions to establish, implement, and sustain an information security program encompassing administrative, technical, and physical safeguards tailored to safeguard customer information.
Here, ‘Customer information’ includes nonpublic personal data in any form, whether paper, electronic, or otherwise. The program must be in writing, proportional to the company’s size and complexity, and align with the nature of its activities. It must ensure information security and confidentiality, guard against anticipated threats, and prevent unauthorized access that could lead to significant harm or inconvenience to any customer.
What is the new FTC Safeguards Rule 2023?
In October 2023, coinciding with the 20th anniversary of the Gramm-Leach-Bliley Safeguards Rule, the FTC announced a significant amendment. This revision expands the rule’s scope, now requiring non-banking financial institutions under FTC jurisdiction to report data breaches impacting 500 or more individuals.
The amendment responds to evolving threats in the financial data landscape. Following a thorough review, public comments, and a national workshop, the FTC revised the Safeguards Rule. This update aimed to bolster protections for consumer information held by non-banking financial entities, such as mortgage brokers and payday lenders. Subsequently, the agency approved a supplemental amendment mandating the reporting of specific data breaches and security events to the FTC, reinforcing the commitment to consumer data protection.
You can read more about the revised rule here.
What does Section 314.1(b) cover?
Section 314.1(b) is all about the rules of the game to handle customer information, specifically in the financial world. If a business is engaged in financial activities or something closely related, it falls under the ‘financial institution’ category. This includes a variety of players like mortgage lenders, payday lenders, finance companies, mortgage brokers, and even services like wire transfers, check cashing, and tax preparation.
Whether you’re a mortgage lender, tax prep firm, or any other financial entity, if the FTC is your regulatory guardian, Section 314.1(b) covers your compliance guidelines.
How to Comply with the FTC Safeguard Rule?
To comply with the FTC Safeguards Rule, covered entities, especially non-banking financial institutions, must:
- Create, implement, and maintain a Written Information Security Program tailored to the size, complexity, and nature of the business
- Ensure the program includes measures across administrative, technical, and physical domains to safeguard customer information
- Assess potential risks, regularly test the effectiveness of safeguards, and adjust the program as necessary
- Educate and train employees to adhere to security measures, promoting a culture of data protection.
- Adhere to reporting requirements
Elevate Your Compliance with Verito Technologies
In the data security landscape, Verito Technologies can be your trusted partner in navigating the complexities of the FTC Safeguards Rule. Our integrated solution offers a seamless and unified approach, covering compliance with the Safeguards Rule and comprehensive cyber risk monitoring to ensure alignment with your IT policies.
Our affordable managed IT solutions include comprehensive FTC Safeguards Rule compliance management. You can choose a pricing plan that aligns well with your unique business needs, and let us take care of the rest.