Originally published in March 2022.
Here at the NADA Show 2022, there’s a lot to see and many people to be seen with, but there’s a topic that seems to be on everybody's lips and minds and that’s the revised FTC Safeguards Rule.
On Thursday, before the show began in earnest, NADA put on an educational session describing in great detail the new and additional requirements the Safeguards Rule is going to impose upon dealers and it is a source of great concern. Of major concern to NADA is a dealer's obligation to oversee their service providers.
This is going to require dealers to put out questionnaires, solicit data, and make judgments about the quality of their vendors' Safeguards Programs. And if those Safeguards Programs are not up to snuff, dealers have to terminate those service providers.
But it works both ways. If the dealer can't meet the Safeguards Rule they may not be able to do business with their banks and we're already seeing banks putting out contract addenda to their lender agreements requiring dealers by contract to comply with the Safeguards Rule. If the dealers don't comply, they will not be able to sell their paper as of the enforcement date of December 9th, 2022.
Is it going to take time to get all of this together and meet the new requirements of the Safeguards Rule? Absolutely. NADA’s Brad Miller said you should be working on it already. It’s a lot to do and the window you have to accomplish it all is rapidly closing.