E-Signature Law Consumer Consent Provisions Working Smoothly, FTC Says

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The Federal Trade Commission concluded in a report yesterday that the consumer consent provisions included by Congress in last year's e-signature law have been working satisfactorily.


The Electronic Signatures in Global and National Commerce Act took effect on June 30, 2000. Its purpose is to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring that contracts are valid and legal. The consumer consent provision of the act requires that businesses obtain e-signatures before sending information electronically which the law requires to be in writing. This act went into effect in October 2000.


To evaluate the effectiveness of the consent provision, the Commerce Department and the FTC surveyed 32 groups including technology developers, consumer groups, law enforcement agencies, banks and members of academia.


The study concluded that the provision facilitates e-commerce and the use of electronic records and signatures, while raising consumer confidence. Consumer groups and law enforcement agencies expressed strong support for the provision as a preventive measure against fraud and a means to increase consumer confidence in the online market.


Another benefit of the provision is that it reassures consumers about the legitimacy of an online retailer. Legitimate merchants would ensure receipt of documents and make certain that the customer is comfortable in making electronic transactions.


Some participants did however maintain that the provision adds an unnecessary step that may delay online transactions and could cause confusion that may deter consumers from using electronic records. While these participants expressed concern about the costs and uncertainties associated with the provision, they agreed that the act provided overall benefits.


Although many e-commerce businesses have implemented the provision procedures, many participants of the study said that not enough time had passed to fully assess its effects.


The majority of participants in the study recommended that all future implementation issues should be worked out in the marketplace and through state and federal laws. Because of this, Commerce and the FTC recommended that Congress take no action at this time to amend the provision.


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