Electronic Signatures

Excerpt from: {see} Digital Magazine - Issue #3
Published: August 1, 2008



ELECTRONIC SIGNATURES

MOVING E-COMMERCE FORWARD LEGALLY AND SECURELY

BY LEW LEVEY, PRESIDENT, COMPUTIME, INC.

As the prevalence of e-commerce continues to grow in today’s global marketplace, many questions are being raised about the legal implications of electronic signatures and the liability a company assumes when it adds electronic signatures to its mix. Many people are unaware that electronic signature law has come a long way in recent years and is no longer the uncharted territory it once was. In this article we will explore the legality of electronic signatures and how they are enabling global commerce to move at the speed of technology.

The first step in our exploration of electronic signature legality is to review the basis of electronic signature legislation. The Uniform Electronic Transactions Act (UETA) and Electronic Signatures in Global and National Commerce (ESIGN) law provide the legal framework surrounding electronic signatures and their role in global commerce. UETA, passed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in 1999, effectively gives legally binding status to electronic documents and signatures. Nearly all states have adopted UETA or enacted their own nearly identical legislation surrounding in-state electronic transactions. In response to the interests of businesses and government agencies, Congress passed ESIGN in 2000 to ensure that the validity of electronic records and transactions cannot be denied solely due to their electronic form. ESIGN intentionally uses broad definitions and technology-neutrality to allow organizations the freedom to determine which technologies they will choose to utilize. 1

It is important to note that, even if the terms of UETA and ESIGN are met, an electronic record is only fully enforceable if it also complies with relevant contract law. To fully understand the legality of an electronic signature, we must understand the definition of an electronic signature and the purpose it serves. According to ESIGN, an electronic signature is "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record".2 "In contract law, a signature serves three fundamental purposes:

  • Evidence: authenticates agreement by identifying the signer with a mark attributable to the signer that itself is capable of authentication
  • Ceremony: act of signing calls attention to the legal significance of the act, preventing inconsiderate engagements
  • Approval: express approval or authorization per terms of agreement" 3

As case law surrounding electronic signatures continues to grow and legal precedents are set, the lines are becoming clearer as to which types of electronic signatures will stand up in court. One thing that is growing increasingly clear is that biometric electronic handwritten signatures meet the above requirements and provide a level of safety and security equivalent or even better than ink-on-paper signatures.

Choosing the right technology can mean the difference between life and death for your company’s future in e-commerce. When evaluating the various types of electronic signatures, the most important factor to consider is legality. One of the easiest ways to ensure than all of your bases are covered is to consider the features of the universally-accepted ink-on-paper signature and compare them to the features of the various types of electronic signatures you are considering.

First, an ink-on-paper signature is unique to the signer. Handwritten signatures are like snowflakes – no two are exactly alike. In fact, an identical signature is one of the easiest ways to identify a forgery. The most effective way to obtain this trait in an electronic signature is through biometric electronic handwritten signatures, which are created by signing the surface of an electronic tablet with a stylus or digital pen, mimicking the familiar actions of pen and paper signing. The best eSign pads capture original biometric data such as timing, velocity, and direction in digital form. Pen pressure, on the other hand, is an unreliable metric under environmental and stress-related changes, and therefore should not be captured, as it can only add uncertainty to the mix. 4

Furthermore, ink-on-paper signatures are capable of verification. Forensics experts (required as experts by the courts), with the right tools, can analyze a signature to determine whether it was created by the alleged signer. They can also determine whether the context of the signed document has been altered in any way after the signing event, which could render the signature invalid. Many types of electronic signatures falter in this area, as they either cannot be analyzed within the context of the document or they do not provide the necessary tools to support such verification. To avoid these issues, you should look for options that capture signatures in terms of raw pen events instead of images and include software that binds the electronic signature directly to the document in such a manner that will invalidate the signature if the document is altered in any way after it has been signed. A good system will also include necessary software tools, training support, and intellectual property and patent coverage for signature and document verification. 5

Finally, ink-on-paper signatures are under the sole control of the signer. Once a signature has been written on a paper document, there is no way for that signature to be moved to a different document or attached to more than one document. When exploring your electronic signature capture options, you should look for systems that use cryptographic techniques to bind signatures directly to the document.6

If you still feel concerned about the legal implications of using electronic signatures, remember that you do not have to go it alone. Partnering with a trusted name in the electronic signature industry greatly increases your potential for successful and legal implementation of electronic signatures. By utilizing industry-leading electronic signature pads, software, and intellectual property from Topaz Systems, you gain access to the knowledge and expertise of a pioneer in the field. Furthermore, Topaz has selected Computime, Inc. of St. Louis, MO, to assist you in the successful fulfillment, deployment, and field support of your electronic signature system.

Despite the legal confusion many have felt toward electronic signatures, companies around the globe have chosen to put down the pen and trust electronic signatures to propel their processes to the speed of technology. Industries such as Healthcare, Automotive, Construction, Financial Services, Government Agencies, and Insurance have embraced electronic signatures to solidify their future in e-commerce. Electronic signatures not only allow companies to slash overhead costs and achieve a swift ROI, they also help them reap the benefits of straight-through processing and streamlined workflow. With legally compliant electronic signatures, companies are able to focus on the customer, not the paperwork. Isn’t that the way it should be?

1Zank, Michael. ESIGN Electronic Commerce and Electronic Signature Law Clarified. 2 Jan. 2008.

2ESIGN §106(5)

3Zank, Michael. ESIGN Electronic Commerce and Electronic Signature Law Clarified. 2 Jan. 2008.

4Zank, Michael. Electronic Signature Systems – A Guide for IT Personnel.. 2 Jan. 2008.

5Zank, Michael. ESIGN Electronic Commerce and Electronic Signature Law Clarified. 2 Jan. 2008.

6Zank, Michael. ESIGN Electronic Commerce and Electronic Signature Law Clarified. 2 Jan. 2008.

View the Original Article and More Inside {see} Digital Magazine

View Our Other Articles From This Issue of {see} Magazine

HOW TO IMPROVE

COLLECTIONS: WHAT TOOLS WORK BEST?

COLLECTIONS

TRUTH AND FICTION

GREATER REWARDS

MAKE E-SIGNATURES WORK FOR YOU

BAD DEBT

ECONOMIC OUTLOOK

 
 
FEATURED PRODUCTS
Business Solutions Newsfeed   Subscribe To Microbilts Business Solutions News Feed

Unfortunately, many consumers believe banks are the only legitimate sources of financing.Contrary to popular belief, there are a number of alternative lending options people c
...[More]
Whether to pay for tuition or a car, consumers are looking to procure loans in whatever way possible. While some take the traditional route and visit their banks for financial
...[More]
When people turn to alternative credit lenders to help them get out of a financial bind, some of them are somewhat confounded by what they've gotten themselves into. In turn,
...[More]
Find Us: