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Frequently Asked Questions

Legal & Compliance

Are electronic signatures legal?

Yes, both federal and state law gives electronic signatures the same legal status as handwritten signatures. Forty-seven states, the District of Columbia, Puerto Rico, and the Virgin Islands have adopted the Uniform Electronic Transactions Act (UETA) promulgated by the Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws).  See the ULC web site for more information.

Three states, Illinois, New York and Washington, have not adopted the uniform act, but have statutes pertaining to electronic transactions.

Additionally, the Electronic Signatures in Global and National Commerce Act (ESIGN), a federal law, provides that electronic signatures are legally enforceable for intrastate commerce and within those states that have not adopted UETA.

Do legal requirements differ from state to state?

Yes and no. The federal Electronic Signatures in Global and National Commerce law and the state Uniform Electronic Transactions Acts (UETA) are similar in substance, and together enable the use of electronic signatures in commerce throughout the US. That said, there may be additional regulations, or compliance requirements, that apply to certain processes (like truth-in-lending disclosures, or protecting the privacy of medical records). But these requirements exist for paper processes as much as for electronic ones.

Have e-signed documents been challenged in court?

Yes, there is a growing body of case law that is establishing precedence for electronic records and signatures. Examples include: Lorraine v. Markel, Vinhnee V. American Express, Campbell v. General Dynamics Government System Corp., 2005 NY Slip Op25526, Shattuck v. Klotzback, Hotmail Corporation v. Van$ Money Pie Inc.

While in some cases, electronic records were accepted as evidence and the transaction under question upheld, in other cases the court did not admit, or at least criticized, the electronic records as evidence.

What are some of the key take-aways from recent court rulings?

In a landmark ruling on the admissibility of electronically stored information (ESI), US Magistrate Judge Paul W. Grimm discussed examples of the essential elements of an effective e-contracting process, notably “creating and securely archiving and retrieving an audit trail of the entire ESI management process, from the steps to verify the identity of the persons signing the record all the way through to sealing electronically the document and then securely archiving and retrieving the e-contract.”  Moreover, Judge Grimm noted, “These same steps enhance the overall persuasiveness of the hard copy of the e-contract as well.”

How can we ensure our electronic records will be enforced in the event of a dispute?

The key to ensuring an enforceable e-signed record and staying out of court in the first place, is to capture and reproduce as much electronic evidence as possible. Creating persuasive electronic evidence can be accomplished by recording and reproducing the exact process used to build the person’s understanding of what they were agreeing to and signing. This includes the exact appearance and order of all of the web screens, documents and legal disclosure that were presented to people; how long they spent on each page; and all actions that they took during the review and signing process, such as clicking on buttons to accept, sign, initial and confirm.

What is the ESIGN Act?

The Electronic Signatures in Global and National Commerce Act (E-SIGN) is a U.S. Federal law that was passed in 2000 that enabled the use of electronic records and signatures for commercial transactions. The act essentially enables organizations to adopt a uniform e-signature process across all 50 states with the assurance that records cannot be refused by a court of law solely on the basis that they were signed electronically.

Because the act is technology-neutral and doesn’t favor any one type of solution over another, the onus is on the organization to determine how it plans to meet the E-SIGN Act’s requirements for capturing signing intent and authenticating data and signers.

Are there any special requirements for presenting legal disclosures over the web?

As with paper transactions, an organization must still prove that it presented consumers with the government-mandated disclosures in the required format and within the required timeframe. In addition, the merchant must be capable of demonstrating that the consumer has consented to receiving disclosures electronically, and that he/she can access the information in the electronic format provided.

Delivering disclosures via your Web site requires more than simply posting disclosures on a Web page. Evidence of the entire disclosure delivery process, including how the disclosure was rendered to the consumer's browser, and which actions the consumer took, must be securely stored in a single audit trail.

What is better from a legal standpoint, an electronic signature or a digital signature?

Although they sound similar, e-signatures and digital signatures are completely different things, and should not be compared. An e-signature is a legal concept. It is the electronic equivalent of a wet ink signature on paper, and must therefore have certain characteristics for evidentiary purposes.

As defined by the US federal ESIGN law, an electronic signature is "an electronic sound, symbol, or process attached to, or associated with, a contract or other record and used as the legal equivalent of a written signature.” A digital signature, on the other hand, is an encryption technology used to secure data. It can and should be used as part of an e-signature for security, but alone, does not meet the legal requirements.