In the digital age, cybersecurity is a pressing concern for businesses—especially car dealerships, which handle sensitive customer data daily.

The Federal Trade Commission (FTC) has established regulations to protect this data. One such regulation is the FTC Safeguards Rule.

This rule, from the Gramm-Leach-Bliley Act, requires non-banking financial institutions—a category auto dealers can fall under due to their involvement in financing—to have strong information security programs in place. These programs must be designed to protect customer information from potential threats.

Non-compliance can lead to FTC enforcement actions, including significant fines and mandatory corrective measures.

This article provides car dealership owners with a clear understanding of the FTC Safeguards Rule and practical steps to secure their digital infrastructure.

Why Car Dealerships Are Considered Financial Institutions

Car dealerships might not seem like traditional financial institutions, but they provide services that categorize them as such under federal regulations. By offering credit and arranging financing, they engage in financial activities involving:

• Personal identification
• Credit information
• Other sensitive customer data

As a result, dealerships fall under the scope of the FTC Safeguards Rule and must comply with financial privacy laws.

Understanding the FTC Safeguards Rule

The FTC Safeguards Rule ensures that non-banking financial institutions, like car dealerships, uphold customer privacy by requiring:

• A tailored information security program
• Proactive threat mitigation
• Protection against unauthorized access

Each dealership must develop a security program based on its size, operations, and complexity. The goal is to ensure data integrity and prevent misuse or breaches.

Key Requirements of the FTC Safeguards Rule

Dealerships must create a comprehensive written information security plan that includes:

• Protection from expected threats
• Prevention of unauthorized data access
• Risk assessments across all operational areas

This allows dealerships to understand their vulnerabilities and take action.

Implementation Steps for Compliance

To comply with the FTC Safeguards Rule, dealerships should:

1. Develop a written security program
2. Identify and assess data risks
3. Implement measures to address those risks
4. Monitor and test security measures regularly
5. Continuously adjust the program as needed

The Role of a Qualified Individual

A Qualified Individual must be appointed to oversee the security program. Their responsibilities include:

• Guiding implementation
• Monitoring effectiveness
• Ensuring alignment with regulations
• Leading ongoing cybersecurity efforts

This person should have technical expertise and a strong understanding of compliance requirements.

Conducting Risk Assessments and Implementing Safeguards

Key Steps:

• Identify threats across all business areas
• Tailor safeguards to the dealership’s operations

Examples of Effective Safeguards:

• Encryption of sensitive customer data
• Strong access controls and authentication
• Regular software updates and patches
• Ongoing testing of security protocols

These measures must evolve with changing cybersecurity threats.

Monitoring, Testing, and Adjusting Security Measures

Effective cybersecurity requires:

• Regular monitoring to ensure all safeguards are functioning
• Routine testing through simulations and vulnerability scans
• Adjustments based on findings and evolving threats

This keeps your systems resilient and up-to-date.

Training Staff and Managing Service Providers

Staff Training:

• Teach secure data handling
• Promote awareness of cybersecurity best practices

Managing Providers:

• Vet vendors for their data protection policies
• Set clear expectations and requirements
• Regularly review provider security practices

Strong internal and external security culture reduces risks.

Preparing for FTC Enforcement Actions

Non-compliance can result in:

• Hefty fines
• Reputational damage
• Required corrective actions

Preparation Tips:

• Stay updated on FTC changes
• Conduct regular internal audits
• Maintain detailed documentation of compliance efforts

Being proactive keeps your dealership compliant and safe.

The Dark Web Threat to Customer Data

The dark web is a real threat where cybercriminals buy and sell stolen customer data. Car dealerships are common targets due to:

• High volumes of personal information
• Often insufficient security measures

To protect against this:

• Encrypt all sensitive data
• Regularly audit access controls
• Monitor for suspicious activity

Steps to Take Now for Compliance and Security

Car dealerships should act now to align with the FTC Safeguards Rule.

Immediate Actions:

• Audit current security practices
• Identify and address vulnerabilities
• Build a custom-tailored information security program

Key Measures:

• Encrypt data in transit and at rest
• Apply strong access restrictions
• Patch software regularly
• Train employees consistently
• Review service provider practices

The Importance of Cybersecurity and Compliance

Cybersecurity is not just a legal requirement—it’s essential for protecting your dealership’s reputation and customer trust. Compliance with the FTC Safeguards Rule strengthens your business against modern threats.

Don’t wait for a breach or FTC enforcement. At OCD Tech, we help dealerships stay fully compliant with the FTC Safeguards Rule.