result in fines of $46,517 per violation. Now that I have your attention, allow me to provide an overview of the new rule. These changes are modifications to the Safeguards Rule that became effective in 2011 and caused most dealerships to implement an Identity Theft Protection Program commonly referred to as a Red Flags Policy. I remember drafting approximately 50 of these plans for our West Virginia dealers. When first adopted in 2011, the Federal Trade Commission (FTC) used a “reasonableness” standard which allowed a dealership to evaluate risks particular to it and take into consideration its location and history on such privacy violations. The new Safeguard Rules have abandoned this reasonableness standard and created a list of arbitrary requirements that a dealership must follow regardless of its size, volume, or historical experience with privacy rights violations or identity theft events. The new Safeguard Rules is very detailed, and my intent below is to provide you with a very high-level overview. Implementation is going to require a team effort of ownership, management, technology specialists, and legal counsel. My advice is to start now. I provided formal comments to the FTC as President of the National Association of Dealer Counsel (NADC) approximately Continued on the following page Issue 4 2021 21 WVADA
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