Did you know that data breaches have skyrocketed by a staggering 300% in the past year alone? With cyberattacks becoming more sophisticated, it’s no wonder that consumer data privacy has made it’s way to the forefront of new federal legislation. When you’re part of the finance industry, you can’t afford to ignore the latest regulatory update from the FTC.
In this article, we’ll dive deep into the intricacies of this new compliance standard, revealing how it’s poised to revolutionize cybersecurity and equip you with the tools to better protect your customers’ sensitive information.
What’s the Federal Trade Commission Safeguards Rule?
The FTC Safeguards Rule is a regulatory provision established by the Federal Trade Commission to protect consumer information held by non-banking financial institutions. Simply put, it requires businesses in this sector to develop, implement, and maintain a robust security program. The primary objective of this rule is to address the escalating number of data breaches, emphasizing the need for advanced security measures to ensure the confidentiality of customer information.
What’s New With the FTC Safeguards Rule Extension in 2023?
The revised FTC Safeguards Rule introduces several enhancements to bolster data security within non-banking financial institutions. Let’s explore some key changes:
Strengthened Data Security Safeguards
Under the updated Safeguards Rule, non-banking financial institutions—including mortgage brokers, motor vehicle dealers, and payday lenders—are mandated to develop and maintain comprehensive security systems, in response to cyberattacks that have plagued U.S. businesses over recent years.
Specific Criteria for Safeguards
To ensure stringent data protection, the revised rule outlines specific criteria for financial institutions to follow when implementing safeguards. These criteria include:
- Limiting access to consumer data only to authorized personnel
- Utilizing encryption to secure sensitive data
- Employing secure software development practices
- Conducting regular risk assessments and addressing vulnerabilities promptly
- Implementing secure authentication protocols
- Maintaining secure physical storage for sensitive information
Information Sharing Practices
Financial institutions are now obligated to provide transparent explanations of their information sharing practices. This includes detailing the administrative, technical, and physical safeguards employed to handle customers’ secure information. The FTC hopes that by enhancing transparency, organizations find it easier to foster trust with their clientele.
Designated Information Security Oversight
Under the new FTC Safeguards Rule, every organization is required to designate a qualified individual to oversee their information security program, and periodically report to the board of directors or decision makers in charge of information security. While it may seem like an extra step, this goes a long way toward ensuring accountability and promoting a proactive approach to data protection.
Potential Reporting Requirements
In an effort to further improve your response to data breaches, the FTC is contemplating introducing reporting requirements for financial institutions. Currently, this isn’t included in 2023’s safeguards rule requirements. However, many industry experts predict it’s only a matter of time before financial institutions are required to report specific data breaches and security events to the Commission. If this new regulation is approved, FTC will issue a supplemental notice of proposed rulemaking, allowing the public to submit comments and contribute to shaping this aspect of the Safeguards Rule.
Technical Changes to Authority
To ensure consistency and harmonization across regulatory frameworks, the FTC has implemented a few technical changes to align its authority under two crucial acts: the Gramm-Leach-Bliley Act (GLBA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
These changes aim to streamline government oversight and provide more clarity for organizations subject to these standards. Under the revised rules, the FTC’s jurisdiction now only applies to motor vehicle dealers. This means entities previously subject to the FTC Safeguards Rule will now fall under the purview of different regulatory bodies. That’s why it’s essential for every organization to stay on top of these changes, ensure compliance, and mitigate any potential confusion.
Lost in the maze of FTC compliance?
Whether you need help deciphering the complexities of new regulations or fortifying your data security measures, Cyberozy helps you develop a robust compliance roadmap—schedule a free consultation to get started!
How Can I Prepare for the FTC Safeguards Rule Extension Come June 2023?
The new FTC Safeguards Rule will go into effect June 9, 2023. Failure to comply with these changes can bring hefty consequences, including regulatory penalties, reputational damage, and potential legal repercussions. To help you navigate these new requirements, we’ve compiled a few practical tips for achieving and implementing the new FTC Safeguards Rule:
- Control Access: Regularly review access privileges and promptly revoke access for employees who no longer need it.
- Know Your Data: Take stock of all customer data collected by your organization, and identify the systems where this information is kept.
- Encrypt Everywhere: Encrypt customer information when it’s stored in your business systems and when it’s transmitted to external parties.
- Assess Application Security: Conduct regular assessments to identify vulnerabilities and promptly address any security flaws.
- Multi-Factor Authentication: Add an extra layer of security by requiring multi-factor authentication for anyone accessing information on your business systems.
- Secure Disposal: Establish proper procedures for the secure disposal of customer data.
- Monitor and Investigate: Maintain a detailed log of authorized users’ activities within your systems, and regularly review these logs to identify any unauthorized access attempts.
Data Privacy Made Easy: Ensure Compliance With Cyberozy
With the new FTC safeguards rule set to roll out in early June, the clock is ticking for organizations to better protect their customer data. Whether you’re feeling overwhelmed planning for these new changes, or simply uncertain about your approach to compliance, Cyberozy IT consulting services are here to help.
Don’t wait until it’s too late – take the first step towards compliance today!