To enhance data security and consumer protection, the Federal Trade Commission (FTC) has amended the Safeguards Rule. The agency has extended reporting requirements to non-banking financial institutions. This amendment is effective 180 days after its publication in the Federal Register. It mandates that financial institutions such as mortgage brokers, motor vehicle dealers, and payday lenders must promptly report security breaches impacting 500 or more people where unauthorized acquisition of sensitive customer information has occurred.
This development stems from the FTC’s commitment to strengthening data security safeguards in the financial sector. It was initiated in October 2021 when changes were first made to the Safeguards Rule. The rule, a part of the Gramm-Leach-Bliley Act, obligates financial institutions to establish and maintain comprehensive security programs to protect customer data.
The amendment underscores the importance of transparency and timely reporting when customer information is compromised. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasized that companies entrusted with sensitive financial data should prioritize safeguarding consumers’ information.
New Requirments
Under the new requirements, non-bank financial institutions must notify the FTC within 30 days of discovering a breach involving unencrypted customer data that affects at least 500 consumers. Notifications to the FTC must include specific details about the breach, including the number of affected consumers.
This amendment is a significant step toward bolstering consumer data security and holding non-banking financial institutions accountable for protecting their customers’ sensitive information. By extending reporting obligations, the FTC aims to provide consumers with greater assurance that their data is safeguarded and that breaches will be addressed promptly, underscoring the agency’s dedication to consumer protection and privacy.
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