A lot of people love the idea of going digital with their documents. But when it comes to actually making the change, the final objections often come as a result of mistaken impressions about the law, business risk, fear of the unknown and the big bad cyber world. If you understood these areas just a little more and realised what you were already doing in relation to e-signatures, you might just be a little more comfortable with them.
Electronic Signature Law. You’re legally supported!
Electronic signatures are as legally binding as a physical, hand written signatures in almost all circumstances where a signature is required. Electronic signatures are supported by laws around the world, with most jurisdictions adopting their own variation of an electronic signature statute. Definitions vary slightly, but under the widely quoted U.S. Uniform Electronic Transactions Act (“UETA”), an electronic signature is set out as a generally agreed definition:
“an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”
If a signature on a document is contested, the signature must meet certain criteria before it can be upheld in court. The criteria vary by jurisdiction and may include an attached uneditable audit trail, saving of the signature in an edit proof document type and acceptance of terms and conditions that outline the electronic nature of the document before the signer signs it.
Risk and Vulnerability. Mistaken Perceptions.
Even though electronic signatures have been around in their current form since the late 1990s (and since the 1800s if we take into account the Telegraph as a legal example), many people are still inappropriately afraid of the validity of an electronic signature. Most contract disputes are not related to the authenticity of the signature or the identity of the contracting parties. The laws generally cater to a great range of electronic contracting and allow flexibility to fit the nature of the transaction.
Ultimately, the legality of an electronic signature and digital document lies in the underlying business process. Often, businesses rely on other means to ensure an electronic signature is valid including talking with the signer in person or by phone before signing a document electronically, an existing business relationship, receiving payment or other indications that prove intent to conduct business that doesn’t rely solely on the signed document. This is good business practice as forgeries do happen – even in the paper world.
It’s important to note that Fraud is a common issue in all signature situations, and neither type of signature (paper or electronic) provides fully effective anti-fraud protections. Business risk needs to be balanced with signature risk.
Fear. What should we really be scared of?
A central question in electronic signatures is one of forgery. How do we know that the person signing the form is actually the person it is intended for? After all, it is possible for many electronic methods of signature to be forged. And the rising problem of identity theft highlights this fear.
If you currently rely on paper signature processes, faxed, emailed or posted, how do you know if it was forged? Do you use notarised or JP witnessed documents? Do you have documents checked by forensically analysing handwriting? How can you prove that it was ‘me’ that signed a document, and not my PA or someone forging it using a scanner? Do staff currently place images of their signature on your documents rather than printing, signing, scanning and emailing them back?
With e-signatures, there is actually much greater control over access to a document by emailing it to people with certain user names and passwords, by having a unique link to the document, and by automatically attaching uneditable audit trails. And if you add the additional business processes as mentioned above, the chances of a document being sent to the correct person, tracked and returned to you as intended, are much higher. Did you know that around 80% of all identity theft is conducted using paper based signature processes – online only accounts for around 20%.
It’s somewhat ironic that in most cases, paper based processes are at a far greater risk of forgery than electronic ones, and yet the fear exists more so with the online systems.
How you already use electronic signatures without even knowing it.
Nowadays you file your taxes, purchase online, buy on e-bay, get a car loan, and even use software on the device you are using now, after agreeing to terms and conditions for its use.
Facilitating these types of transactions are electronic agreements, often in the form of electronic signatures. The concept itself is not new, with common law jurisdictions having recognised telegraph signatures or morse code used to send messages often intended as enforceable contracts. Early enforceability of telegraphic messages as electronic signatures came from the New Hampshire (USA) Supreme Court in 1869.
In the 1980s many companies and individuals began using fax machines for high-priority or time-sensitive delivery of documents. Although the original signature on the original document was on paper, the image of the signature and its transmission was still electronic.
Courts in various jurisdictions have decided that enforceable electronic signatures can include agreements made by email, entering a personal identification number (PIN) into a bank ATM, signing a credit or debit slip with a digital pen pad device at a point of sale, installing software with a clickwrap software license agreement on the package, and signing electronic documents online.
So, perhaps without even knowing it, your use of Formaliti Online Signature has already been happening for years. So now knowing where the law sits, the real risk, and that you’ve possibly been using electronic signatures for years, I hope you can turn your energy into e-signature implementation rather than investigating or spending time worrying why or if it’s possible, legal or enforcable.
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