October 3, 2000
Electronic signatures are legal and binding, but it will be some time before they catch on
The electronic signature law, known officially as the Electronic Signatures in Global Commerce Act, went into effect at the beginning of this month. However, many people are still wondering what an e-signature is and how it will affect the way they do business.
An electronic signature can be a number of different things. It can be as simple as an image of a person's signature which is attached to electronic documents to prove they are authentic. More likely, electronic signatures will look nothing like traditional ones. When people electronically sign a document, they may attach an encrypted code, enter a password, use a smartcard or attach a facial or retina scan. As long as the electronic signature can verify the sender as a handwritten signature can, it's legal. The new law doesn't specify how e-signatures should look.
The use of e-signatures in business will be limited at first. They will mainly be used by lawyers, investment brokers, banks and other companies that deal with many documents that require signatures. Consumers won't use them much to make purchases unless the purchase is as large as a car or a house something too expensive to use a credit card for. Businesses will find e-signatures handy for assuring business-to-business deals. As with most things, it will take time for new electronic signature technology to become common and accepted. Once that happens, most aspects of business may be done online.
Since electronic signatures are binding by law now, businesses can save time by sending and signing documents digitally, but some may be hesitant to accept the new technology. According to the law, no one is obligated to agree to use or accept electronic records or signatures, and when a notice must be provided to consumers in writing, an electronic version is only acceptable if the consumer has agreed to accept the electronic version. Also, the law applies to most documents, but paper will still be required for many court documents.
It will take a while for electronic signatures to catch on, but when they do, analysts predict they will be common in business. The extent to which e-signatures are used will depend mostly on the technology and security being developed now.
- by Julia M. Duncan