As an auto dealership in the United States, you're responsible for validating your customer's auto insurance and adding their new vehicle to their existing auto policy so they can take delivery of the car. Traditionally, the most common way to do this has been for the car salesperson to call the insurance carrier or agent and verbally communicate the customer's information over the phone. However, this gold-standard process will become a violation of the Federal Trade Commission (FTC) Safeguard Act beginning in the summer of 2023.
The Safeguards Rule was created by the FTC in 2003 to help businesses protect their customers' data from misuse. This rule was updated in 2021 and now includes non-financial institutions. If your car dealership has information on at least 5,000 individuals, whether in physical or digital form, you must comply with the rule by the summer of 2023. The primary goal of this rule is to ensure that your dealership has the necessary measures in place to protect your customers' data from cyberattacks and other potential threats.
If you're running an auto dealership, it's crucial to be aware that every time your salesperson verifies a customer's coverage and adds their newly purchased vehicle to their existing auto policy over the phone, you will be in violation of the Safeguard Act. In the absence of appropriate safeguards, anyone present in the dealership could potentially listen in to the conversation and record the customer's information for unauthorized and illegal use.
Thankfully, Gather offers a solution that protects dealerships from such violations through its insurance validation tool. With this simple technology, customers can update their insurance policy instantly and automatically while in the dealership. By collecting customer information electronically and transmitting it directly to the insurance carrier, Gather's solution is the only safe and compliant option available to auto dealers on the market today.
Auto dealerships have been granted an extension until June 9, 2023, to comply with the updated Safeguard Rules. The original deadline of March 1, 2022, was postponed due to the COVID-19 pandemic.
To ensure your dealership complies with the updated Safeguard Rules and avoids potential fines and litigation for non-compliance, we recommend considering the Gather process. To learn more about Gather's insurance validation tool and how it can help you stay compliant, visit our Gather for Auto Dealers webpage.