House Passes Electronic Signature Bill

By an overwhelming margin of 426 to 4, the U.S. House of Representatives passed the Electronic Signatures in Global and National Commerce Act on June 14th. The legislation gives contracts signed online the same legal status as paper contracts signed in-person and will remove what many consider to be a major obstacle to conducting business over the internet. The bill is particularly likely to have a positive impact on retail financial services delivery. E-commerce analysts have noted that many businesses have hesitated to conduct transactions such as home mortgages and insurance policies online because there have been no generally accepted national guidelines for accepting digital signatures. The Senate is expected to quickly pass the bill and the President has signaled that he will sign it into law.

The bill establishes strong consumer rights in the electronic exchange of contractual information. In particular, sellers must obtain explicit consent from customers to participate in an electronic transaction environment and to receive electronic records. Some particularly important notices such as court orders, eviction notices and cancellation of health insurance must still be sent through traditional distribution channels.