E-sign - Be Careful What You Ask For

Dateline: 07/23/00

When President Clinton used a magnetic card to electronically sign Public Law No. 106-229 -- the Digital Signatures Act -- on June 30, he also used a conventional ink pen to sign a paper copy. Whether he did so to "make it official," or "just in case," use of the pen on paper seems to have been a precursor to some thorny legal and technical questions now surfacing about this new law, parts of which take effect Oct. 1.

One major concern comes from the real estate industry and from county clerks who are worried that state courts may be required under the new law to begin accepting electronically filed and signed contracts for sales and transfers of land by Oct. 1. While the real estate industry jumped to integrate online functions into its own daily operations years ago, U.S. state and even federal courts have been much slower to follow suit. According to real estate attorneys, many state courts remain far from ready to deal with or even acquire the technology necessary to accept electronic contracts. 

By requiring that in any transaction of interstate or foreign commerce, "a signature, contract, or other record ... may not be denied legal effect, validity or enforceability solely because it is in electronic form," state courts may be forced to deal with electronically signed contracts before they are prepared to do so.

A last minute rush by courts to install piecemeal solutions in order to comply with an Oct. 1 deadline could, say lawyers, result in the permanent loss of electronically filed contract and deed records. 

Also coming into question is the constitutionality of provisions of the Digital Signatures Act which might preempt or otherwise conflict with existing state laws dealing with electronically signed documents.

To muddy the E-sign waters even further, the Digital Signatures Act contains exclusions -- legal documents that will still (at least temporarily) require conventional manual signatures. Wills, for example, along with divorce decrees and other court-issued papers related to family law are excluded. Also excluded are, "court orders or notices, or official court documents (including briefs, pleadings, and other writings) required to be executed in connection with court proceedings." The excluded documents will not fall under the requirements of the Act until March 1, 2001.

Are documents like land records, deeds, title transfers, doing-business-as (DBA) notices, and hundreds of similar mundane legal papers the same as "court orders or notices," and thus excluded from the requirements of the Act? A tough question which needs an official answer by Oct. 1.

E-Signatures - What now? What next?
Have you E-signed anything yet? The commercial sector that pressed so hard to get digital signature legislation on the "fast-track," now faces the grim realities of getting what it asked for. Here are just a few things that will slow down wide-spread use of digital signatures.

Lack of Technical Standards: The Digital Signatures Act says nothing about the technology -- the computer hardware and software -- with which we will be electronically signing off on our future, in the future. Dozens of companies are now rushing to market systems of cards, pens, pads, scanners, readers and, of course, software, for digital signatures. Even if we make the positively nutty assumption that all of these systems are as reliable and safe from fraud and identity theft as advertised, will they all work together? Finding just the right combination of hardware and software will take time. Time during which, the legal questions of e-signatures on legal documents will drag their way through the legal system in court-case-after-court-case up to and including the U.S. Supreme Court.

The Digital Divide: Face it, American business sector, this digital signature stuff will be neither cheap, nor easy to implement. Any business that is not already pretty fully computerized will probably be financially unable to employ e-sign to any useful degree for years. Should e-signatures become wildly popular with consumers, will these companies be able to survive? The question brings to mind subjects like, government grants, programs, loans and even subsidies to help business bridge the e-sign stretch of "Digital Divide." Politicians will hear "new taxes," a place they to which don't even want to go. 

Security: One by-product of new laws is new criminals. After a careful reading of the Digital Signatures Act, do you notice a warm-fuzzy feeling that after e-signing your e-name you will be safe from e-theft, e-fraud and e-forgery. Probable e-not. Besides premeditated, intentional criminal abuse, consider the accidental disasters that could come from e-signatures. With a click of a mouse, your kid could sell your house, or, worse yet, buy you 10,000 shares of stock in a brand new digital signature software company.

Reference Resources

Digital Signature Technology Developers
These are three representative companies currently marketing E-sign technology. Take a look at what they have to offer.

VeriSign, Inc.  
Entrust Technologies Ltd.
Interlink Electronics

Advisory Commission on Electronic Commerce
Created by Congress and tasked with producing what is arguably the most important policy initiative of the information age: recommendations on electronic commerce and tax policy, critical issues with global implications.

What is a Digital Signature?
A simple, common language explanation of digital signatures and digital certificates from What Is.com.

E-signatures bill: Fraud made easy?
"A newly passed digital signature bill may boost business, but it could leave consumers footing the bill in fraudulent transactions." -- SDNet News, June 16, 2000.

Clinton E-signs Digital Signature Law 
A very famous quill pen was used in Philadelphia on July 4, 1776 to sign the Declaration of Independence. Today, almost 224 years later, President Clinton used a specially encoded "smart" card to sign into law a bill making electronic signatures as valid as those signed by hand in ink. From your About Guide.

Digital Signatures - Not so Fast
After President Clinton signs the Digital Signatures Act, unanimously passed by the Senate last Friday, what will you be able to do that you can't do now? Nothing -- until the little problem of digital forgery is worked out.  From your About Guide.

Sign Here Please
Can you prove who you are in cyberspace? Net Security Guide Jim Williams takes apart a digital signature.

Electronic Commerce in Canada
A Canadian electronic commerce strategy: security, privacy, consumer protection, world-class infrastructure, and clear marketplace rules. Canada Online Guide Susan Munroe reports.

Interview With VeriSign
An e-mail interview with the leaders of digital certificate technology conducted by Net Security Guide Jim Williams.

Security on the Internet
Security and encryption on the Internet. Major algorithms, software, and tools compiled by Internet Guide Jason Zien.

E-Government! Online Government Services
From adopting wild horses to buying T-bills and bonds, the US Government is working to make more an more of its services available to Internet users. Try out E-Government now. From your About Guide.

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