By March 20, 2020, both federal and state-level policymakers were considering an amendment to authorize or further speed up the use of e-signatures—as well as e-notarizations and remote notarizations (RONs)—for business transactions.
Under existing regulations, e-signatures and e-notarizations are extensively controlled by federal, state, and county laws.
The ESIGN (Electronic Signatures in Global and National Commerce) Act applies when an electronic signature is used at the federal level. According to the ESIGN Act, e-signatures carry the same legality as a wet or hardcopy signature.
At the state level, the Uniform Electronic Transaction Act (UETA), which also considers electronic signatures as legally-binding, swings into action. The same Act is in effect in the District of Columbia.
At the moment, almost all states, but for Illinois, New York & Washington, have implemented the UETA.
And now, Congress is working on a bipartisan plan to allow RONs at the federal level. The proposal dabbed the Securing and Enabling Commerce Using Remote, and the Electronic Notarization Act of 2020 (SECURE Act) will allow all US notaries to initiate remote notarizations (RONs). It will further set laws to streamline cross-state transactions.
Under the current legal arrangement, every state is free to establish its RON standards. As of now, states like Connecticut and New York have taken advantage of executive action to introduce the use of RONs. The two states now permit RON payments through audio-video chat platforms like Skype, FaceTime, et al.
Florida has also followed suit to authorize RONs thanks to an order from its state’s Supreme Court. In the meantime, the state of Georgia is working on plans to implement similar policies.
What to Remember as Electronic & Digital Signatures Become the New Normal
So, what are the four major components of the ESIGN Act?
(1) The individual signing the doc must do so with intent and at free will;
(2) Both parties must agree to use electronic signatures for the contract or transaction.
(3) It would help if you had a way to validate that the intended consigner is responsible for the signature on the doc.
(4) Both parties (and/or the legally permitted) must have access to a copy of the doc if it matters.
Remember to look into the following when using e-signatures for your deals.
- Use the PDF format for hassle-free dealings
Your contract is not without blemish, and even if it is, your client will certainly need one or two amendments to its terms and conditions.
Using PDF eases the process of editing and making adjustments (on the same doc) as it is the universal document format.
- Learn the Jargon
Is there a difference between electronic and digital signatures? Well, if there is, then it’s a very thin line.
Electronic signature is the umbrella term for signing a doc using a computer program or app, instead of traditional methods like ink.
A digital signature, on the other hand, is a more complex definition, which in most cases, involves extra measures like a stricter verification process for the signer, and encryption to preserve document integrity.
Before implementation, both parties must familiarize themselves with these terms and agree to the type of signature in use.
- Use wording that favors the use of E-signatures
State clearly in your contract that by signing the document, both parties understand and agree to the use of an electronic or digital signature, and consider it legally binding.
- Email directly to the signer
You want to email directly to the signer for two important reasons (1) document confidentiality and security and (2) timely reviewing and approval by the client.
Do not use a company address or a shared email!
Learn the ins and outs of your E-signature tool. Getting up to speed with your tools will help you get the most out of it and avoid operating out of compliance.
So, what are the features that matter most to an e-signature tool?
- Hassle-free signing:You want a user-friendly platform that will help convert prospects to clients. Your tool should allow a signer to add a signature in 2-3 steps.
- Compatibility with Mobile and web devices:Many of your clients will want to sign through tablets and smartphones. Use a tool that accepts both platforms to meet the needs of both.
- Compliance with any Industry-specific rules: Some industries have stricter E-signature laws. Confirm if your tool is in accordance.
- Auto-reminders:automatic reminders asking one to sign a doc can help keep clients on their toes.
- Doc Expiry Dates:a tool that allows you to set doc expiry dates can keep a signatory worried knowing their deal may expire if they don’t act in time.
Many other features matter, but these are the pillars of a reliable solution.
The shift to digital signatures may not be as simple as it sounds, but it is indeed possible.
Businesses must go step by step, and remember to involve clients in the shift for an organized friction-free transition.
Beryl A. Miller is an experienced copywriter and a digital marketing presenter who has adored the art of content marketing to create a strong online presence. She contributes on trending topics on emerging technologies. When she’s not writing, she spends her skateboarding.