 "Here Come the Privacy Cops "
By: Thomas Hudson
Late last week, we picked up rumors from two sources to the effect that the Federal Trade Commission was probing dealerships in order to determine whether they were complying with the FTC's new "Safeguarding" privacy rule. The dealers reportedly had received letters demanding to see a long list of documents dealing with privacy compliance.
The Safeguarding Rule, which became effective May 23, 2003, requires dealers to have a written policy setting forth the ways in which the dealership safeguards the private information of its customers. That policy will require a comprehensive risk assessment. The Rule also requires that each dealer oversee service providers and that they appoint a "privacy czar" to oversee the dealership's compliance with the Safeguarding Rule.
The Rule has spawned a cottage industry of lawyers and consultants peddling "solutions" for the requirements imposed by the Rule. Many of these so-called solutions are one-size-fits-all programs that were fashioned without any significant dealer input.
In our view, that sort of slap-dash effort isn't a serious approach to complying with the Safeguarding Rule. Something approaching actual compliance is going to take many, many hours of the time of senior dealership management and, probably, a substantial expenditure for outside assistance.
One of the best tools available for dealers who are taking their obligations under the Safeguarding Rule seriously is the National Automobile Dealer's Association's Management Guide, titled "Safeguarding Customer Information." It IS NOT a safeguarding privacy program that can be adopted by a dealer and put on a shelf to gather dust.
Rather, it is a blueprint to guide the dealer and the dealer's lawyers, accountants and other consultants in establishing and maintaining a program that complies with the Safeguarding Rule. For a copy of the Guide, call (800) 252-NADA (6232) ext. 2 or visit www.nada.org/mecatalog. If you don't have a safeguarding policy in place, you'd better get your rear in gear. The Federal Trade Commission is the agency that enforces this rule, and they are the meanest cops in town. They wield an $11,000 per violation hammer, and they like to use it to make examples and grab headlines. The current probes of car dealers indicate that the FTC is serious about the new Safeguarding Rule. You'd better be serious, too.
Copyright © 2003 Consumer Credit Compliance Company, LLC. All rights reserved.
This publication is designed to provide accurate and authoritative
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a competent professional should be sought.
For more information about Thomas Hudson and Spot Delivery® go to www.spotdelivery.com
or contact: tbhudson@hudco.com
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