Following negotiations that have consumed most of this year, the U.S. House of Representatives and the Senate have apparently reached an accord on the terms of a digital signature bill.
Both branches of government agreed that an e-signature bill was needed, and each had passed its version with little opposition last year. However, reaching an agreement on the specific details has proved challenging.
The Clinton administration had expressed concern over stipulations in the bill that it felt could weaken consumer protection, while business groups objected to sections that called for consumer consent, which they believed could hamper the development of e-commerce.
John Hancock for a New Economy
The goal of all concerned was to craft legislation that would give electronic signatures the same force of law as traditional paper agreements and handwritten signatures. Digital signature technology uses encryption to scramble information so that only the parties legitimately involved in a contract can read it.
The compromise agreement had to not only please the House and the Senate, but address concerns that had separated Democrats and Republicans as well. Several stumbling blocks have been addressed in the bill, particularly those that some lawmakers felt usurped individual state government authority.
The new version also contains a provision ensuring that private citizens who do not have Internet access will receive important documentation by other means. Although the bill must still be put to a full vote, the compromise version reportedly is strong enough to speed the measure toward passage.
Laundry List of Compromises
Among the issues remaining to be settled is a deadline date. March 1, 2001 has been proposed as the last date for records required by law — such as mortgages and financial securities — to be filed electronically. Some businesses and lawmakers are asking for more time to comply.
Under the revised proposal, consumers will have to opt in for access to electronic records. The concession was made in acknowledgement of the fact that most consumers have yet to adopt the Internet as their primary means of communication.
Under the terms of the legislation, consumers can choose to be notified electronically about such things as warranties, changes in interest rates, or factory recalls on merchandise.
A spokesperson for the American Electronics Association (AEA) said the agreement on the digital signature legislation is a vital prerequisite for the continued growth of e-commerce because it provides legal certainty for online businesses.
However, some powerful lobbying groups, including the American Bankers Association, still object to some of the language built into the bill to encourage consumer protection.
Financial services organizations are determined that the bill must address all of their concerns, since they will be able to significantly reduce the amount of paper contracts they must maintain if the right bill is passed.
Legislators who support passage of the bill are predictably upbeat about the compromise version. “Electronic signatures and records will help grow the digital economy by giving American consumers greater confidence in their online business transactions,” said Rep. Tom Bliley (R-Virginia), chairman of the House Commerce Committee.
Skeptics are expressing worry over how common use of digital signatures might compromise the privacy of individuals. At issue is the concern that companies may gain access to extra personal information when verifying consumers’ identities.
Other critics say that current technology does not make digital signatures safe from theft.