Congress has provided an often overlooked compliance challenge for e-signatures
As consumers continue to move away from paper and spend more time sending documents and payments electronically, companies need to step up and keep compliant with the regulations that protect convenience. Electronic payments are covered at length — but what about signatures?
The Electronic Signatures in Global and National Commerce Act (E-Sign Act) provides parties with the ability to substitute electronic records for paper and sign electronic records using electronic signatures in place of wet signatures. It is also the law Congress passed to make clear digital documents and digital signatures have the same force and effect as paper and pen.
But E-Sign also contains an often-overlooked section that addresses when and how one may substitute the digital delivery of a legally required consumer disclosure in place of traditional delivery methods, such as hand delivery, certified mail or the U.S. Postal Service.
Creditors, governmental bodies, health care providers and third-party debt collectors all need to embrace the consumer disclosure requirements of E-Sign if they want to save on postage expenses and satisfy the growing needs of consumers to manage their business using electronic communication methods. To learn more about the Consumer Financial Protection Bureau’s position on E-Sign and how it impacts the third-party debt collectors, read the decision at Lavallee v. Med 1.
I have seen E-Sign disclosures presented in as many as three pages filled with legalese or succinctly presented in a pop-up box on a debt collection website. But the length and complexity of the disclosure information is far less important than your need to simply address each point in your disclosure method and to provide this information to the consumer before they consent to receive their legal disclosures and documents electronically.
If you are contemplating the use of text messaging or email to provide consumers with legally required disclosures, such as the FDCPA’s validation notice or postdated payment notice or legally required documents, such as Reg E’s authorization for preauthorized electronic funds transfers, advise your team to embrace E-Sign and use it to your advantage. It can save you the cost of many hundreds of thousands of first-class mail stamps.