It Will Take More Than a Federal Law to Make Digital Signatures Practical
Jaskiewicz, Stanley P., American Banker
A movie mogul reportedly once said, "An oral contract isn't worth the paper it's printed on," but is an online banking contract, signed electronically, any more solid under the new Electronic Signatures in Global and National Commerce Act than the sand in the silicon chip it's written on?
The new law has a simple goal. In plain English, it does not matter how you make a contract. A written agreement, a clicked acceptance, and an exchange of e-mails are equally valid.
Yet as financial services companies race to exploit the new rules with cost and timesaving innovations, consider the risks from a common sense standpoint alone. No paper record exists. You may not even know your customer -- or whether the name you were given is correct.
And will financial companies realize the promised savings on their investment in technology to support e-signatures? Will people who do not make deposits at ATMs suddenly stop filling out account-opening forms and mailing them in because of digital contracts?
Businesses must also calculate whether the new law's burdens justify the headache. After all, how expensive is the paper follow-up to a fax signature?
Regional and national institutions will not even see an end to differences by state in electronic contracting law. Though many states have adopted the Uniform Electronic Transactions Act, most have amended it so much that it has become anything but uniform.
As a result, forms and procedures had to be customized, state by state, eating up any cost savings. Yet the e-signature law does not override this problem with a single national rule. Instead, it requires a confusing analysis of which state rules still apply.
Anyone relying on electronic contracts, therefore, must keep one file drawer firmly planted in the paper world. …