Digital Signature Bill Sets Stage for New Era

President Clinton will soon usher in a new stage in the digital age where the electronic signature and Internet-conveyed record have the same legal standing as a pen-and-paper document.

The president has strongly backed the electronic signature legislation, which cleared the Senate on Friday by an 87-0 vote, saying it will marry the old value of consumer protection with the newest technologies so “we can achieve the full measure of the benefits that e-commerce has to offer.”

The bill, which the House passed earlier in the week by 426-4, sets a national framework for giving online signatures legal status. With that, consumers who shop online for a new car or a home mortgage also will be able to seal the deal using their computers.

It also could provide big savings in money and time for businesses that now must use paper and the U.S. Postal Service to conclude transactions or transmit documents.

It is a bottom-line issue for the high-tech industry, “hastening the day when commerce online is as common as it is offline,” said William T. Archey, president of the American Electronics Assn.

“This bill literally supplies the pavement for the e-commerce lane of the information superhighway,” said Sen. Spencer Abraham (R-Mich.), a chief sponsor.

Both the House and the Senate passed e-signature bills last year, but it took months of negotiations between Congress and the administration to work out a compromise that protected consumers from abuses without overly burdening businesses with new regulations.

The final version requires a consumer to agree to electronically signed contracts and consent to receiving records over the Internet. Companies must verify that customers have an operating e-mail address and other technical means to receive information.

Some notices, such as evictions, health insurance lapses or electricity lapses, must still come in paper form.

Sen. Patrick J. Leahy (D-Vt.), who opposed earlier versions that he said did not adequately protect consumers, said the final product finds a constructive balance. “It advances electronic commerce without terminating or mangling the basic rights of consumers.”

The legislation, which consolidates the many state laws on e-signatures, does not prescribe a technology that must be used to verify an electronic signature. Security protocols can be as simple as a password, or can utilize fast-emerging new technologies such as thumbprint scanners.