FTC Approves New Data Breach Notification Requirement For Non-Banking Financial Institutions

On October 27, 2023, the FTC approved an amendment to the Safeguards Rule (the "Amendment") requiring that non-banking financial institutions notify the FTC in the event of a defined "Notification Event" where customer information of 500 or more individuals was subject to unauthorized acquisition. The Amendment becomes effective 180 days after publication in the Federal Register. Importantly, the amendment requires notification only to the Commission – which will post the information publicly – and not to the potentially impacted individuals.

Financial institutions subject to the Safeguards Rule are those not otherwise subject to enforcement by another financial regulator under Section 505 of the Gramm-Leach-Bliley Act, 15 U.S.C. 6805 ("GLBA"). The Safeguards Rule within the FTC's jurisdiction include mortgage brokers, "payday" lenders, auto dealers, non-bank lenders, credit counselors and other financial advisors and collection agencies, among others. The