FTC Strengthens Security Safeguards for Consumer Financial Information Following Widespread Data Breaches
Agency updates Safeguards Rule to better protect the American public from breaches and cyberattacks that lead to identity theft and other financial losses
October 27, 2021
The Federal Trade Commission (“FTC”) has announced significant updates to its Safeguards Rule, aimed at enhancing the security of consumer financial information in response to a rise in data breaches and cyberattacks. These updates mandate that non-banking financial institutions, including mortgage brokers and payday lenders, implement comprehensive security systems to protect sensitive consumer data from identity theft and financial losses. The revised rule specifies that these institutions must limit access to consumer data, employ encryption, and clearly communicate their information-sharing practices.
Additionally, financial institutions are required to designate a qualified individual to oversee their information security programs and report periodically to their board or a senior officer. The updates stem from extensive public input and seek to reinforce the responsibilities of entities that collect sensitive data. The FTC is also considering further changes that would require financial institutions to report specific data breaches and security events. Alongside these updates, the FTC has made technical adjustments to align with the Dodd-Frank Act, which refines the agency's jurisdiction over certain financial institutions regarding information-sharing practices.
For more information, see here: https://www.ftc.gov/news-events/press-releases/2021/10/ftc-strengthens-security-safeguards-consumer-financial
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