E-Signing On the Dot.com Line|
By Nancy McPoland
(July 30, 2000)
New laws in the United States, Ireland and Great Britain have made it possible for netizens to "sign on the dotted line" electronically. The new legislation has its problems however, and analysts fear a major hurdle in consumer confidence must be overcome before the new technology comes into widespread use.
President Clinton signed the Electronic Signatures in Global and National Commerce Act on June 30, which will go into effect March 1, 2001. The Act was unanimously approved in the Senate and passed the US House by a 426-4 margin.
The bill gives legal weight to contracts signed by means other than the traditional handwritten, including the use of smart cards, pressing a button on a touch-tone phone, clicking on a website button or hyperlink, and other means.
Businesses are required to verify that the consumer has "opted-in," or agreed to participate in the electronic agreement and must confirm that the consumer has the necessary hardware and software to complete the transaction. Certain documents, such as notices of termination, including evictions, utility cutoffs, and insurance lapses, are still required to be served on paper.
Clinton signed the bill at Liberty Hall in Philadelphia by hand, and then electronically via smart card. A planned webcast of the event on EXBTV failed when a server crash prevented the broadcast. (Warning: the website seems still to be experiencing technical difficulties and may not be accessible to all users.)
Clinton addressed the Internet concerning the bill on his July 4 webcast via EXBTV, saying "This new law will give fresh momentum to what is already the longest economic expansion in our history, an expansion driven largely by the phenomenal growth in information technologies--particularly the Internet with its almost unlimited potential to expand their opportunities and broaden their horizons." The President said that the bill would offer consumers "a whole new universe of online services," from finalizing mortgages to opening brokerage accounts.
The bill does not specify how online transactions will be offered. A number of software companies plan electronic verification software to take advantage of what is seen as a growing market in the processing of business and government contracts.
Proponents of the legislation claim that replacing paper forms and documents with electronic ones will greatly speed up the process of applying for loans and completing purchases. Digital signatures use an encryption system based on a unique private "key" or identifier, issued to each user. The business or government agency would hold a matching public key which will allow the decoding of the user key.
Consumer advocates worry that not enough protection against abuse is included in the new legislation. Some argue that the law will allow website product disclaimers or software installations containing electronic contracts to be "signed" by the consumer without proper notification, obligating the user to conditions that may not have been approved.
Privacy advocates also worry that the legislation does not specify how a signer is to be identified, warning that scam artists could see this as a heaven-sent opportunity to create a new identity or "borrow" one from someone else.
Following the US signing, Irish President Mary McAleese sat down at a computer keyboard and electronically signed similar legislation in her country July 10. The Irish bill, enacted under a European Commission (EC) directive which instructs all members to legally define the use of electronic signatures, differs from the US bill in offering explicit consumer protection for encrypted transmissions.
Great Britain followed suit July 25 by enacting section seven of the Electronic Communications Act 2000, although legal experts in that country claim it will have little impact and would require substantial legislation to overhaul tax regulations to take advantage of the digital signature in the drafting of legal documents such as wills.
All parties are interested in dismantling barriers to paperless e-commerce, as well as enabling large corporations to streamline record-keeping. Companies who had resisted digitalizing due to the legal uncertainty of the validity of electronic signatures can now proceed. But, consumer advocates warn that there still remains a great deal of legal definition in the courts as well as more widespread adoption of digital technology before the full potential of safe e-commerce can be realized.