The Federal Trade Commission (FTC) has approved a pivotal amendment to the Safeguards Rule, which now requires non-banking financial institutions to report certain data breaches and security events to the agency. This amendment signifies a major shift in the regulatory landscape, emphasizing the FTC’s commitment to consumer data protection.
The Amendment in Detail
The FTC’s amendment mandates that financial institutions report a security breach involving the personal information of 500 or more consumers within 30 days of discovery. The notification must include details such as the types of information exposed, the number of consumers affected, and a description of the event.
Implications for Non-Banks
Non-banking entities like mortgage brokers, motor vehicle dealers, and payday lenders are now under the FTC’s purview to develop, implement, and maintain comprehensive security programs to protect customer information. This amendment builds on the changes finalized in October 2021 to strengthen data security safeguards.
Strategic Response to the Amendment
Non-banks are advised to establish processes and procedures for reporting data breaches and security events as described in the amendment. It’s crucial for these institutions to also implement mechanisms to track the volume of consumers affected by any data breach or security event.
Conclusion
The FTC’s latest amendment reinforces the agency’s stance on the responsibility of financial institutions to protect sensitive consumer data and maintain transparency in the event of a compromise. This development is a clear indication that the FTC is intensifying its efforts to ensure the safety of consumer data in the financial sector.
