Electronic signatures provide protection for businesses and consumers. But when is an e-signature official? A fake or uninformed electronic signature can provide serious problems for business owners.
What kind of problems?
Serious ramifications can result when a business wrongly relies on an e-signature to satisfy federal regulations. If the signature does not meet federal, state, and/or local requirements, the business can face allegations of violating laws like the Telephone Consumer Protection Act (TCPA). This can come with serious financial penalties.
How can I make sure an electronic signature is official?
There are two laws that help to make sure electronic signatures serve as a valid tool for businesses. The Electronic Signatures in Global and National Commerce Act (ESIGN) allows the use of electronic signatures as a legal method of agreement. To qualify under this law, the signer must show intent to sign. Examples include using a mouse to sign or clicking a clearly labeled accept button.
The Uniform Electronic Transactions Act (UETA) provides guidance on electronic signature use for each state. Illinois and New York have yet to adopt it, but instead use their own statutes. It essentially states that an electronic signature will suffice for any law that requires a written record — effectively extending it to cover laws like the TCPA.
It helps to think of a valid electronic signature having three requirements: it must be authentic or tied to an actual customer, potentially by requiring customers to use a password or by using an IP address to link the signature to an individual. Next, the customer was sign with clear intent to sign, as discussed above under ESIGN. Finally, the signature must be associated with the document, issue, or record.
It is important that businesses regularly review these requirements. The rules can change and when this happens your business may need to adjust to better ensure compliance.