In today’s digital world, wire transfers have become an integral part of countless businesses. Because of this, customer security and information privacy information is now a top priority for the FTC. The Federal Trade Commission (FTC) Safeguard Rules introduce protections on sensitive consumer data. These rules establish a framework for businesses operating as financial institutions. Let’s delve into the FTC Safeguard Rules and explore their significance for businesses that you may or may not think need to comply.
The FTC Safeguard Rules, initially part of the Gramm-Leach-Bliley Act (GLBA) are going into effect on June 9th, 2023. These rules enforce requirements for organizations handling sensitive customer information. The biggest one that is mentioned is automobile dealerships due to the financing and loans on cars. Moving forward they must follow a set of security measures and controls. This rule applies to a wide range of businesses deemed as “financial institutions” and more information can be found under FTC Safeguards Rule, Section 314.2.
These are 5 examples of businesses considered as a financial institution:
1. Banks and Credit Unions
Let’s start with traditionally what you think of as a financial company. The organizations do many wire transfers and of course. These institutions should have strict security measures in place to protect customer information. Still, if they do not, they will be subject to enforcement from the FTC.
2. Money Transfer Services
Companies like Western Union, for example, that wire money for consumers need to comply. This also includes online payment platforms as another example.
3. Brokerage Firms
Most brokerage firms like mortgage brokers because brokering loans is a financial activity. These firms play a crucial role in managing investments and executing transactions for clients daily. They handle sensitive customer data like social security numbers or banking accounts.
4. Travel Agency
You might be thinking “Why would this organization fall under the Safeguard Rules?” Well, if a travel agency is selling you airline tickets, or traveler’s checks for your trip, they adhere to the new rules.
5. Check Printing Companies
Believe it or not, because a business is selling you those customized checks with your favorite cartoon character, or sports team. They are also a financial institution because they are printing and selling checks to a consumer. Think about it, checks have personal or business account numbers. If a breach happens, this could financially impact the person or business.
Businesses operating as financial institutions need to start meeting compliance soon. It is of utmost importance as the FTC will start enforcing these rules on Friday, June 9th. By following these security measures, organizations will better protect consumer’s data. There are 9 elements of a company’s information security plan that must be included. Examples being conducting regular risk assessments, setting up written cybersecurity plans, and training employees. By following these rules, companies can enhance customer trust, mitigate risks, and safeguard sensitive data. Remember, the Safeguards Rule not only protects customer information but strengthens the overall security posture of financial institutions in our growing digital world.
Have a question about whether your business needs to meet these Safeguards Rules? Schedule a Discovery Call to discuss your specific concerns or questions. We can get started with a Risk Assessment for you.
