One of the biggest misconceptions among powersports dealers is the belief that many state and federal compliance regulations do not apply to them. Nothing could be farther from the truth! In many states, motorcycle dealers are covered under “New Motor Vehicle Dealer” statutes that were written for automotive retail. Eight states have laws that specifically address powersports dealers. Another 17 states have “Franchised Dealer” statutes that define a dealer agreement as a franchise agreement, regardless of what an OEM wants to call it. Dealer-OEM relations may also be covered by multiple laws within a state.
From a federal regulatory standpoint, the Federal Trade Commission has regulations that impact automotive, recreational vehicle, and powersports dealers nationwide. Beginning on June 9, those compliance requirements will expand significantly as the updated Safeguards Rule goes into effect. These stringent requirements relate to information security practices in your dealership. In our current environment of data breaches, security hacks and stolen identities, failure to comply with these requirements could mean expensive fines, lost trust from your customers, lenders, and the community, as well as crippling cybersecurity issues. Let’s break down the details and see what steps you need to take to protect your dealership and your customers.
What is the Safeguards Rule?
Originally enacted in 2003, the FTC amended the Safeguards Rule in 2021 but extended the deadline for compliance to June 9th of this year, giving dealerships more time to incorporate the needed equipment, training and procedures. Specifically, the new requirements include: