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The FTC Safeguards rule is a key compliance standard for the financial industry. This rule helps protect customers’ sensitive information when they work with financial organizations.
But did you know this rule can also apply to real estate brokers?
If your business engages in financial activities of any kind, you could be subject to the FTC Safeguards rule.
Let’s take a closer look at how the FTC Safeguards rule applies to real estate brokers and what you can do to stay compliant.
Key Takeaways
- The FTC Safeguards rule is a compliance standard for financial institutions that requires organizations to develop an information security program to protect customer data.
- This rule has been expanded to apply to any organization that conducts activities that are financial in nature, which includes some real estate brokers.
- A compliant information security program should include safeguards like access controls, regular risk assessments, employee training, and an incident response plan.
- A managed IT services provider can help your organization remain compliant and develop an effective cybersecurity strategy.
Why Does The FTC Safeguards Rule Apply to Real Estate Brokers?
The Gramm-Leach-Bliley Act (GLBA) of 1999 aimed to protect customer privacy in the financial services sector, leading to the creation of the FTC Safeguards Rule. Initially applied to financial institutions, the rule has since expanded to include some real estate brokers.
If your real estate business handles financial transactions, assesses property values, evaluates credit, or stores financial records, you must comply with the rule.
However, businesses with fewer than 5,000 records are exempt, though protecting customer data is still recommended.
Given the personal information involved in property transactions, real estate is a common target for data breaches. Implementing safeguards protects your clients from identity theft and builds trust.
What Does the FTC Safeguards Rule Require of Real Estate Brokers?
If your real estate brokerage is subject to the Safeguards rule, you will need to put an information security program in place. The goal of this program is to protect customer information from data breaches and other cybersecurity risks.
There are a wide range of safeguards you will need to put in place to keep your customers’ personal and financial information private.
Administrative Safeguards
To comply with the FTC Safeguards rule, real estate brokers will need to put new administrative procedures and regulations in place to promote data security.
Regular Risk Assessments
Start by conducting regular risk assessments to identify vulnerabilities in your system. These assessments should guide your security strategy and be performed regularly, as cybercriminals frequently develop new threats as technology advances.
Ongoing Employee Training
Real estate brokers must implement an employee training program focused on information security best practices. Training should involve all employees, regardless of their role.
Given that 26% of employees fell for phishing attacks in one study, consistent training is crucial to improve awareness and response to threats.
Incident Response Plan
A written incident response plan is essential to prepare for potential data breaches. This plan should outline how you’ll secure your systems, notify clients, and recover lost data.
While strong cybersecurity practices reduce risk, a response plan can save significant costs if a breach occurs, potentially preventing over $232,000 in damages.
Technical Safeguards
Access Control
Limit access to client financial data only to employees who need it. Strong password policies and multi-factor authentication should be in place to prevent unauthorized access to your systems.
Security for Remote Work
For team members working remotely, enforce the use of VPNs and other security protocols to minimize risks from unsecured Wi-Fi networks.
Network and Server Protection
Ensure your organization has standard security measures in place for all servers and networks, including firewalls, antivirus software, and threat detection tools to defend against cyberattacks.
Third-Party Software Compliance
If you rely on third-party software, verify that these platforms comply with the FTC Safeguards Rule and other relevant regulations to maintain security.
Regular Updates
Regularly update both software and hardware. Many hackers exploit known vulnerabilities in outdated systems, so consistent updates help patch or eliminate these risks.
Physical Safeguards
In addition to putting digital safeguards in place, you also need to use appropriate safeguards for your office and other physical spaces.
This should include security in the entrance to the building, whether that’s a trained security professional or a digital access system.
You will also need to put extra security measures in place for the rooms where your servers are stored. For example, employees may require a special pass to access this area.
You can also use security cameras, biometric access codes, or even AI-powered security tools to physically protect your systems from bad actors.
How Can a Managed IT Service Provider Help You Comply?
Keeping up with FTC Safeguards Rule compliance can be challenging for mortgage brokers, real estate appraisers, and other non-banking financial institutions, especially without an in-house IT team.
Managed IT service providers (MSPs) offer third-party IT and cybersecurity support to help you meet compliance requirements.
MSPs can assist by:
- Conducting Risk Assessments: MSPs offer impartial assessments to identify system vulnerabilities you may overlook.
- Developing and Maintaining Security Programs: They create and implement FTC-compliant information security programs tailored to your business, ensuring minimal disruption and long-term maintenance.
- Providing Employee Training: MSPs offer regular cybersecurity training, phishing simulations, and assessments to help employees spot threats.
- Ongoing Monitoring and Testing: MSPs provide 24/7 monitoring, manage system updates, and conduct penetration testing to address vulnerabilities and ensure continued compliance.
