SAN JOSE, Calif. -- It's no big secret any more that people can
get great deals shopping for automobiles on the Internet. Capitol
Honda in San Jose sold 108 cars online in the last month -- nearly
double the month before.
But like thousands of business people across the country,
Capitol's Internet sales manager, Chuck Fowler, hopes online deals
can really take off now -- thanks to a new federal law that cuts out
The electronic signatures act, which gives legal standing to
documents "signed" online, took effect last week. That means Fowler
will no longer have to ship buyers financing forms and other
documents, then wait for them to come back with signatures.
"In the best case, we're looking at three days' turnaround. With
this, now, it's now -- right now," Fowler said.
The electronic signatures law had almost no opposition in
Congress and President Clinton signed it in June. Now no contract,
signature or record can be denied legally binding status just
because it is electronic.
That means a signature transmitted on a fax, for example, is
valid, as are electronic signatures sent online -- digital
signatures. Eviction notices, certain court documents and health
insurance information must still come in paper form, however.
Nearly every state had similar laws, but the patchwork of
regulations was tricky for use in interstate commerce. Many
companies waited for uniform nationwide rules before putting digital
signature technology into widespread use.
"We think the room was full of gasoline and diesel fuel vapors,
and this effectively is the ignition," said Scott Lowry, chief
executive of Digital Signature Trust.
The Salt Lake City company, 22 percent owned by the American
Bankers Association, issues digital certificates that let computer
users prove their identity when they sign a document online.
Added June Yee Felix, chief executive of New York-based CertCo,
another company that validates online identities: "We're envisioning
a world in which there's going to be lots of trading between people
who have never done business together before."
It will take some time, however, before most people understand
what exactly digital signatures are. In a recent telephone survey of
managers at 250 small- and medium-sized non-Internet companies
conducted for Office.com, fewer than half knew the answer.
Largely because of such confusion, Frank Prince, an analyst at
Forrester Research Inc., predicts it take as much as five years
before digital signatures have much impact on e-commerce.
To digitally sign documents, a person must first obtain a digital
certificate supporting their identity -- the equivalent of a
physical world driver's license or passport.
Issuing such certificates, in addition to CertCo and Digital
Signature Trust, are companies including Entrust Technologies Inc.
and VeriSign Inc.
The digital signatures themselves are analogous to numerical John
They are delivered via the Internet using two numerical keys. One
key is kept secret and stored as a software file on a computer. The
other number, the public key, is stored online, in a sort of
When a document with a digital signature is sent (after the
initiator "signs," usually by typing in a password that encrypts the
data), the receiving party verifies the signature with the sender's
The accompanying digital certificate authenticates that person --
proving they have a real-world identity that can be trusted. …