ABA Bank Compliance - July/August 2019

THESE DAYS, we conduct a lot of our business on our phones—we check email, we read the news, we stream movies and even refill prescriptions. We can order from Amazon with “1-click” and it will be like Christmas when it shows up in a couple days. The transaction so simple, that I literally don’t
remember it at all. Even my 85-year-old mother regularly conducts transactions on her
phone, although she did accidentally make a video last week when she intended to take
a photo, and wondered after she sent it “why does it have an arrow over the picture?”

Given how prominent electronics are, why are the laws on the books so antiquated regarding how we can deliver things online and to devices, and how we assure electronic signatures and transactions have the same legal weight as their analogue counterparts? Why are we talking about the Electronic Signatures in Global and National Commerce Act (E-SIGN) in 2019 when it hasn’t been revised in almost 19 years? Because, we are all doing everything online and with those laws still on the books, it is important we get it right. The law is what it is, and there is no indication that it will change. Congress has had several opportunities to amend the law—in particular the steps required to “provide affirmative consent” and “reasonably demonstrate” the ability to receive disclosures—and deliberately chose not to do so. As late as last December, E-SIGN was before a congressional committee, and they did nothing to change how it operates.

E-SIGN BACKGROUND

E-SIGN was signed into law on June 30, 2000, and it is found at Pub. L. No. 106-229, 114 Stat. 464 (codified at 15 U.S.C. §§ 7001-7031). It was an effort by Congress to provide a general set of rules that would govern electronic records and signatures to promote electronic transactions. Once E-SIGN was law, where something that a statute, regulation, or law requires to be provided “in writing,” or “signed,” an electronic record (as defined) will suffice instead of paper delivery or “wet” signature, with exceptions. E-SIGN requires that specific steps occur before the delivery of consumer disclosures. Failure to go through all the steps, in the proper order, with the ability to prove the authenticity of the delivery or signature, can lead to significant compliance, legal, transaction and reputation issues.