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Electronic Signature Law Working Well: FTC Report

by Staff
June 27, 2001
2 min to read


Consumer consent provisions included by Congress in last year's electronic signature law have not been unduly cumbersome on U.S. business, according to a Federal Trade Commission (FTC) report issued June 27.


The consent requirements, which impose special rules on businesses that want to use e-signatures, have yielded benefits that "outweigh the burdens of its implementation on electronic commerce," the FTC concluded.

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The electronic signature legislation, passed overwhelmingly by the 2000 Congress and signed into law, gives electronic signatures and documents the same force in law as their paper counterparts.


The report, which was required by lawmakers as part of the e-signature law, recommends no changes be made to the consumer protection provision.


The provision "appears to be working satisfactorily at this stage," according to the FTC report. The report also said it would be premature to change the law because of industry's lack of experience with the requirement.


The e-signatures law will help pave the way for a new era of electronic commerce, according to proponents, by enabling companies from mortgage brokers to car dealers to complete transactions online that previously required a signature on paper.


At the insistence of consumer groups, the new law contains a provision that requires documents be offered electronically to consumers only if they agree to receive it that way "in a manner that reasonably demonstrates that the consumer can access information in the electronic form," according to the FTC.

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To determine whether the provision is overly burdensome, the agency received input from 32 interested groups, ranging from computer companies and banks to consumer groups and academics.


The consent provision provoked some criticism. For example, some e-commerce companies said the consumer provision added an unnecessary extra step to online transactions.


Critics told the FTC that the requirements confuse some customers and could make them reluctant to do business electronically, according to the report.


But the agency said it also heard from consumer groups and others who praised the requirements.

Proponents of the consent provision said it helped reassure consumers about which online businesses are legitimate and helped prevent deception and fraud.

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The provision may also protect e-commerce businesses from spurious legal claims by providing electronic or paper document trails of transactions, according to the FTC.


"The provision facilitates e-commerce and the use of electronic records and signatures while enhancing consumer confidence," the FTC said.

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