What Are the United States FTC Safeguards?
According to the Federal Trade Commission, dealerships must follow the FTC Safeguards Rule, which states that auto dealerships are required to develop, implement, and maintain an information security program. The program should include administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of the personal information of the dealership’s customers.
Why Do FTC Safeguards Matter?
U.S. auto dealerships can be prime targets for hackers, mainly due to the broad scope of private information they gather over years or decades of large-scale financial transactions. Cybercriminals also target dealers in the hopes that they have out-of-date IT infrastructures and poor cybersecurity awareness, which would make it easier to acquire massive quantities of personal data. You’re in the automotive industry rather than tech, after all.
When customers finance or lease a vehicle at your dealership, they’re sharing their most sensitive personal information. Increase the chances of them returning for another purchase by following the FTC Safeguards Rule. Auto dealers who follow these requirements are not only acting lawfully and ethically, but they’re also increasing customer confidence and trust. When you partner with Strolid, you’ll gain digital marketing services that adhere to these and other compliance rules for full-service business and customer protection.
The Current FTC Safeguards Rule for Auto Dealers in the United States
In 2003, the FTC Safeguards Rule for auto dealers was created. In 2021, the FTC amended the rule to evolve in line with current technology and provide more concrete guidance for businesses. Fast forward to 2023, when the FTC amended the rule for a second time to mandate that dealerships report data breaches and security incidents to create more rigorous protections against cyberthreats.
How To Maintain FTC Compliance
These are the nine security requirements you must follow to preserve your auto dealer FTC compliance:
- Qualified Individual: Hire a qualified professional or promote an eligible member of your IT staff or a Chief Information Security Officer to implement your security program.
- Risk Assessment Protocol: Inventory your customer data and locations where it’s stored, evaluate your information security measures, record risk assessments in writing, and periodically audit your security program.
- Comprehensive Security Program: Form a plan to mitigate risk and red flags found during your risk assessment. The Safeguards Rule requires you to implement and review access controls, identify your information ecosystem, encrypt customer information, assess your applications, set up multifactor authentication, dispose of customer data securely, anticipate and evaluate modifications to your network, and maintain an activity log.
- Regular Testing: Closely watch your safeguard program to confirm its efficacy and test it regularly to identify security threats as they arise. You must also conduct annual penetration testing and bi-annual vulnerability assessments.
- Proper Training: Train dealership employees, including desk staff, on security awareness so they can identify threats, such as phishing scams, malware, and viruses, to avoid security breaches.
- Vetted Security Providers: Any company that collects and processes customer data, particularly cloud or software vendors, must have an up-to-date understanding of risks.
- Information Security Updates: Change your plan to reflect current cybersecurity standards and ensure it fits your dealership’s current processes.
- Incident Response Plan: Create or revise your response protocol to prepare for a breach or mishandled data.
- Board of Directors: Report your current information security protocols to your Board of Directors at least once per year.
How To Avoid FTC Safeguards Rule Penalties
If you don’t maintain auto dealer FTC compliance, the Federal Trade Commission can take serious action against your business. Failing to protect customers’ private information is a serious offense, and dealers that are noncompliant can be charged a penalty fee per violation. In extreme cases, the FTC may even file a civil lawsuit against your store, costing thousands in legal fees and eroding public trust.
Take note of your dealership’s most recent risk assessment and compliance check: Was it more than a year ago? We strongly recommend that you make every effort to adhere to the most current protocols, legitimize your company, and establish greater credibility moving forward. Your business can thrive when you put security and privacy first.
Identity Protection and the FTC Red Flags Rule
Identity theft is also a common challenge for consumers, especially because of the breakneck pace of technology evolution. To combat this crime, the Federal Trade Commission also issued the Fair and Accurate Credit Transactions Act. This rule requires certain businesses, including automotive dealerships, to enforce an Identity Theft Prevention Program in writing.
Your Identity Theft Prevention Program should be updated periodically and monitored for red flags before they become real problems for your business. If you choose to work with Strolid, we’ll ensure that your dealership remains as reliable and trustworthy as possible for your customers.
How Strolid Assures FTC Compliance
Our digital agency offers online marketing, sales BDC, and service BDC support, but underpinning all these solutions is compliance with the FTC Safeguards Rule. Auto dealers across the United States rely on Strolid systems to reach their goals and maximize their growth. Click over to the comprehensive database of partners and tools we use to streamline, market, and organize information for our dealership clients.
You can also contact us – a Strolid representative will walk you through our marketing services and products and help you explore personalized ways that we can align your marketing strategy with complex FTC dealership rules. We work hard to ensure your total compliance so you don’t have to.
If you’re on the fence about outsourcing your FTC compliance to an external partner, our customer reviews say it all: Strolid has built a wide community of satisfied clients! By following the FTC Safeguards Rule for auto dealers, your business can continue building a solid bedrock of trust with returning and prospective customers while avoiding steep federal penalties.
Frequently Asked Questions
When is the FTC Safeguards Rule compliance deadline for auto dealers?
The deadline for complying with the FTC Safeguards Rule was June 9, 2023, but dealerships that missed the deadline are expected to make every effort to adhere to the rule’s nine requirements. The rule is in place to ensure dealerships make every effort to protect information from cyberattacks and customers from data breaches. Keep your buyers’ personal information safe by familiarizing yourself with the FTC Safeguards Rule for auto dealers.
What are the FTC rules for dealers in 2025?
For 2025, no new regulations or amendments have been added to the FTC Safeguards Rule. Auto dealers can reach or maintain federal compliance by following the current published FTC Safeguards Rule. The rule requires dealerships to train staff, test security programs to identify security threats, evaluate information security measures, adhere to current cybersecurity standards, and report information security protocols to the Board of Directors, among other guidelines.
What are the penalties of FTC Safeguards noncompliance for car dealers?
Noncompliance with the FTC Safeguards Rule for auto dealers is a serious offense. If your dealership fails to meet current guidelines, the Federal Trade Commission can levy civil penalties against your business and file a civil lawsuit. Your dealership and customer data will also be vulnerable to cyberattacks, a damaged reputation, and broken trust with customers if their private information is stolen.
