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Electronic Signature Terminology

This valuable and comprehensive glossary of terms will become an indispensable aid to companies considering the adoption of electronic signatures. Key terms covered and defined include: Authentication, Authoritative Copy, Click Wrap, Digital Certificates and much more.

Authentication - Data
Authentication – User
Authoritative Copy
Biometrics
Click Wrap
Digital Certificates and Certificate Authorities
Digital Signature
Digitized Signature
Electronic Signature
E-Signature Process Management®
Electronic Signature and Records Association (ESRA)
Electronic Vault
ESIGN
MERS
MISMO
National Association of Variable Annuities (NAVA)
Process Signature®
PKI
SPeRS
Transferable Record
UCC Article 9
Uniform Electronic Transactions Act (UETA)

Authentication - Data:
Data authentication is a process whereby information contained in a signed document is verified to ensure it has not been changed or altered since the document was signed. On paper, this involves scanning or reading the document. With an electronically signed document, this process can be automated and electronically performed in batches or by simply opening an individual document. Electronic data authentication also permits a more thorough scan of the document, and will identify even the smallest of changes such as font color. The electronic signature(s) contained within the document should be visibly invalidated if an unauthorized change to the content or the signature is detected.

Authentication - User:
User authentication, a process that verifies the identity of an individual, is an important element of any signature, whether on paper or electronic. Online user authentication is accomplished in two steps. First is identity verification, followed by credential authentication. In face-to-face transactions, identification is accomplished by verifying a person’s unique credentials, such as a passport, a driver’s license or a social security number. In online processes, identity is typically verified through a series of challenge/response questions. Subsequent to the initial identification process, electronic credentials can be issued. Electronic credentials may take the form of an ID and password, a smart card. or a digital certificates. ID and password is the most commonly used form of electronic credential for Web-based transactions with the consumer public.

Authoritative Copy:
The Uniform Commercial Code Section 7 outlines a set of requirements that must be met for electronic documents of title. On paper, ownership of a document of title such as a deed or chattel paper is made easier because originals are identifiable as such and copies are obvious. In the electronic world, multiple copies of document can be made easily and appear as exact replicas of the original. System controls and security must be used to establish ownership of a document of title. A document will be considered an authoritative copy:

  1. If it is unique, identifiable and unalterable.
  2. It identifies the person asserting control over the document.
  3. Copies or amendments to the document that add or change an assignee of the authoritative copy can be made only with the consent of the person asserting control and all copies of the authoritative copy must be readily identifiable as a copy that is not the authoritative copy; and,
  4. Any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

Biometrics:
Biometrics is a form of user authentication consisting of unique physical characteristics, such as fingerprints, iris scans, retinal scans, digitally captured handwriting, speech, DNA, or any digital information that can be linked to a specific person’s biological information. Due to the cost and system requirements involved, the use of biometrics for e-signature applications is typically limited to high-risk, high-value processes involving repeat users.

Click Wrap::
A term used to describe a method of e-signing in a Web environment. Users click buttons on a Web page to demonstrate their intent related to signing. The signed data or documents are then ‘wrapped’ or secured to prevent future tampering.

Digital Certificates / Certificate Authorities:
A digital certificate is an electronic credential that uses public and private ‘keys’ to uniquely identify a person online. Digital certificates, as with any credential, are only as good as the process by which they are issued. The identity of a person should be established prior to the creation of a digital certificate. Digital certificates can be centrally issued and managed by an individual or department within an organization, or by a trusted third party known as a Certificate Authority (CA) who assumes the responsibility of verifying an individual’s identity. Similar to biometric authentication, the expense and system requirements of digital certificates make this form of user authentication for online transactions with the public challenging at best.

Digital Signature:
Digital signature technology is the foundation for a variety of security, e-business and e-commerce products. Based on public/private key cryptography, digital signature technology is used in secure messaging, public key infrastructure (PKI), virtual private networks (VPN), secure socket layers, and electronic signatures. 

Contrary to what the name might suggest, a digital signature is not a type of electronic signature. Rather, digital signature encryption is used by electronic signature applications to secure or bind the data and verify the authenticity of a signed record.

Digitized Signature:
A digitized signature is an image of a person’s handwritten signature saved as an electronic file. The signature image can be captured by signing an electronic pad or by scanning a signature from a paper document. A digitized signature alone is not considered secure because it is not in the sole control of the signer. Like any other image file, a digitized signature can be easily copied and pasted into other documents without a person’s consent. However, when a digitized signature image is combined with a secure electronic signature application, it can be applied to a document without risk of forgery or tampering. The law does not require the use of a handwritten signature image as the visual indication of intent in electronic processes. Instead, a signature block with a person’s name and unique identifier can be used.

Electronic Signature:
An electronic signature, like its paper equivalent, is a legal concept. The U.S. Electronic Signatures in Global and National Commerce Act (E-SIGN) defines an electronic signature as “an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign a record.” Based on this definition, an electronic signature can be broken down into the following components: a method of signing; data authentication; user authentication; capture of intent.

E-Signature Process Management:
E-signature Process Management is Silanis’ unique approach to e-signing. E-signature Process Management removes the complexity of managing the many e-signature process variables and exceptions for different documents, jurisdictions, channels etc... Records are handled from the time they are created by the document generation system, through to the signature capture and distribution of fully executed documents to the customer, the carrier and any other parties to the transaction.

Electronic Vault:
A system used for securely storing electronic records and data.

Records signed by the Silanis e-Sign Suite of Solutions need not reside in a proprietary vault in order to be verified or remain secure. Silanis’ document-centric approach to signing embeds the signature, security and audit trail within the document for seamless integration with any document or content management system.

Transferable records, because of their unique requirements, do require storgage in a vault in order to track to ownership of the chattel. But with Silanis’ eVault Manager, you can turn any existing Records Management system into a vault.

Electronic Signatures in Global and National Commerce Act (ESIGN):
ESIGN is a US Federal law passed in 2000 enabling the use of electronic records and signatures across the US for any transaction relating to the conduct of business, consumer, or commercial affairs in or affecting interstate or foreign commerce. It does not apply to any level of government that is covered by separate laws such as the Government Paperwork Elimination Act (GPEA). 

E-SIGN:

  • Enables the use of electronic records and signatures where laws require documents and signatures and parties to agree to use electronic versions;
  • Enables electronic transmission of government mandated disclosures subject to appropriate consent from recipient;
  • Allows for any record may be retained electronically as long as it remains accurate and accessible to all entitled parties for as long as the record is required;
  • Allows for the use of an electronic signature for notarization;
  • Defines an electronic signature as 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;
  • Enables use of electronic promissory note for the purpose of a real estate loan.

Electronic Signature and Records Association (ESRA):
The Electronic Signature & Records Association, a cross-industry association, is dedicated to increasing awareness and understanding of electronic signatures and records. Open to public and private organizations, technology providers and industry partners, ESRA promotes the SPeRS guidelines, and works closely with standards and industry organizations such as MBA, AFSA, and NAVA. http://www.esignrecords.org/

Mortgage Electronic Registration System (MERS):   
MERS provides online eNote registration services for mortgage lenders to track electronic mortgage promissory notes. Silanis participated as a member of the MERS National eNote Registry Development Advisory Team, a group that reviewed and advised MERS registry development efforts.  http://www.mersinc.org/

MISMO  Mortgage Industry Standards Maintenance Organization:
MISMO developed the SMARTdoc standard, a data standard for electronic mortgages.
Silanis is an active member of the MISMO eMortgage workgroup and supports the ability to e-sign MISMO SMARTDoc format according to MISMO eMortgage guidelines.  http://www.mismo.org/

National Association of Variable Annuities (NAVA):
NAVA is a non-profit trade association that provides a variety of services to the annuity industry including educational forums, research and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance. NAVA has published Straight-through Processing Standards of which electronic signatures are a critical component. Silanis is an active member of NAVA and participated in the electronic signature proof of concept. http://www.navanet.org/

Process Signature®:
A process signature is a type of electronic signature developed by Silanis to provide greater evidence for Web-based transactions. In a Web-based signature process, it is not enough to produce a signed and secured document. Differences in system capabilities can alter the way some information is displayed in a browser calling into question whether intent was properly established and whether compliance requirements were met. In order to prove the validity of the transaction, Silanis captures the entire sequence of Web pages, as they were presented to the signer, including the review, signing, acceptance and delivery of documents. The resulting electronic evidence is securely linked to the documents. In the event of a legal dispute, the Process Reviewer can be used to replay the sequence of events that occurred leading up to the signed record.

PKI:
A Public Key Infrastructure is a security system used to issue and manage digital certificates. Electronic signatures can use digital certificates as a method of user authentication. When used to sign a document, the resulting electronic signature contains the signer’s digital certificate.

Standards & Procedures for Electronic Records & Signatures (SpeRS):
SPeRS is a committee formed by the Electronic Financial Services Council to produce best legal practices and guidelines to help the financial services industry implement compliant electronic signature, electronic disclosure and electronic vaulting solutions. Silanis is a founding member of this committee. For a copy of the SPeRS standards, please visit http://www.spers.org/

Transferable Record:
A transferable record is the electronic equivalent of a paper promissory note or chattel paper used to secure a loan against property such as a house or a car. The Electronic Signatures in Global and National Commerce Act (ESIGN), the Uniform Electronic Transactions Act (UETA) and the Uniform Commercial Code Section 9, all contain "transferable record" provisions that authorize the use of electronic negotiable records. There are, however, additional requirements related to control of the record that must be met in order to demonstrate ownership. Silanis’ eVault Manager addresses these requirements for lenders, custodians and secondary market investors.

Uniform Commercial Code (UCC) Article 9
A provision of the Uniform Commercial Code, Article 9, enables the use of electronic documents for equipment leasing and financing contracts. For the full text of Article 9 visit http://www.law.cornell.edu/ucc/9/

Uniform Electronic Transactions Act (UETA):
UETA is the state-level equivalent to ESIGN passed in 49 states. It provides very similar provisions as described for ESIGN. Where UETA is not in place or if the state-level law differs greatly from ESIGN, ESIGN takes precedence.