FTC Safeguards Rule:   Effective Date December 9, 2022

Who is covered by the New Safeguard Rule?

According to Section 314.1(b), an entity is a “financial institution” if it’s engaged in an activity that is “financial in nature” or is “incidental to such financial activities.

To keep it simple, if you collect Personally Identifiable Information used to lend money, it is a good idea to know the safeguards rules.

There is an exception from some of the regulations if you maintain customer information on fewer than 5,000 consumers.

This refers to Section K of the Bank Holding Company Act of 1956.

ACTIVITIES THAT ARE FINANCIAL IN NATURE. –For purposes of this subsection, the following activities shall be considered to be financial in nature: (A) Lending, exchanging, transferring, investing for others, or safeguarding money or securities.

This does not include banks, savings and loan institutions, and federal credit unions. That would be regulated by other government agencies.