E-sign Compliant Definition

The E-Sign Act has established major requirements for e-Signature validity. For e-Signature validity, businesses or financial institutions and their consumers must enter into an agreement. This agreement, implied or explicit, pertains to conducting business electronically.

Conducting business electronically may require consumers to provide their e-Signatures. E-Signatures, as stated by the E-sign Act, are valid if there is an intent to sign by the consumer. The consumer also has the option to decline the signature request.

The signature request is fulfilled by the consumer who signs the signature. The signature, according to the E-sign Act, must make a visible mark or statement on the document. The document must show the association of the signature with the record.

The record is attributed to the signature of the consumer. The consumer’s signature or unique mark, as stated in the E-Sign Act, must be attributable to the consumer signing and only linked to the consumer.

The consumer affixes the signature on the electronic documents. The electronic documents signed by the consumer are required by the E-Sign Act to be saved, viewed, or printed by the business institution or the consumer and stored for future reference.

E-Sign Process

E-Sign works similarly to handwritten signatures. Handwritten signatures are unique to each consumer or signer. When the consumer or signer provides the electronic signature on a document, the signature is created using the signer’s private key. The signer’s private key is securely kept by the signer.

The signer’s signed document is matched digitally using the mathematical algorithm. The mathematical algorithm acts as a cipher that creates a hash. A hash is a set of data that matches the signed document and is encrypted to form the E-Signature. E-Signature is also marked with the time of the signing of the document. If the document changes after the signing, the E-Signature is invalid.

Another e-Signature authentication method is SMS authentication. SMS authentication verifies the signer’s identity using a secure one-time SMS code. The SMS code is sent on the signer’s mobile phone and is required to be entered into the login page. The login page, when successfully logged in, will give access to the documents that require an e-Signature.

The next e-Signature authentication method is the secret question challenge. The secret question challenge requires the signer to successfully answer the challenge questions. The challenge questions are referred to as shared secrets because the questions and answers are pre-selected ahead of time. The secret question challenge is similar to knowledge-based authentication (KBA). KBA is used when the e-Sign service is integrated with third-party ID verification services. Third-party ID verification services include consumer reporting agencies such as Equifax that provide the KBA questions. The KBA questions are presented in real-time to the signer.

The next e-Signature authentication method is government ID verification. Government ID verification uses government-issued IDs. Government-issued IDs include passports, driver’s licenses, social security cards, and other forms of verification. These IDs are captured and analyzed in order to authenticate government-issued identity documents.

Another e-Signature authentication method is biometric comparison. Biometric comparison is used for high-risk, high-value transactions with unknown signers. Signers may be required to take a selfie picture. The selfie picture will be compared to the photo on their government-issued ID for identity verification. Identity verification takes only a couple of seconds using this method.

E-Sign HIPAA compliant

Yes, e-Sign is Health Insurance Portability and Accountability Act (HIPAA) compliant as long as mechanisms are put in place to ensure the validity and security of the document, contract, agreement, or authorization, and there is zero risk to the integrity of Protected Health Information (PHI) according to HIPAA Journal.

HIPAA Journal mentions that proposals for the use of e-Signatures under HIPAA rules were included in the 2003 Security Rule draft but were removed before the legislation was enacted. The U.S. Department of Health and Human Resources published guidance in relation to the Business Associate Agreements and the exchange of electronic health information. The guidance states that no standards exist under the HIPAA rules with regard to electronic signatures. Electronic signatures, when used by covered entities, must be in a legally binding contract under applicable State or other law.

The FCRA defines what is not a permissible use of credit reports or consumer reports. Consumer reports are not allowed to be procured in general for employment purposes, as stated in the FCRA Section 604. The FCRA Section 604 also mentions several exceptions if there is a clear and obvious written disclosure to the consumer before the consumer report is procured. The written disclosure must state that the consumer report may be obtained solely for employment purposes. Another exemption is if the customer has written authorization from the person who will procure the consumer report.

The consumer report may be furnished for credit or insurance transactions that are not initiated by the consumer. The consumer, according to the FCRA, can have the credit report or consumer report procured by a consumer reporting agency in connection to a credit or insurance transaction that is not initiated by the consumer only if the consumer has given authorization to the consumer reporting agency to provide the consumer report to the person.

What Does e-Sign Stand For?

E-Sign stands for Electronic Signatures in Global and National Commerce Act. The E-Sign Act is a law that allows electronically signed documents to have legal status as hard copy documents and covers both U.S. interstate and foreign transactions based on an e-Signature.

The E-Sign Act permits the use of electronic records to satisfy any statute, regulation, or the rule of law. Any statute, regulation, or the rule of law may require electronic records in writing from the consumers. Consumers must affirmatively give consent to the use of such information.

Benefits Of e-Sign

The benefits of e-Sign or e-Signatures pertain to the document challenges that they solve. These document challenges can be a hindrance to making business transactions much easier and simpler.

The first benefit of e-Signatures is that it cuts down on stationery costs. Stationery costs include printing papers and ink cartridges. Printing papers and ink cartridges usage is lessened, which also equates to decreased spending for business. Businesses can enjoy completing the signing process digitally using computers and mobile devices with e-Signatures.

Another benefit of E-signatures is saving time. Time can be saved because e-Signatures are much faster than handwritten signatures. Handwritten signatures require more time when signing documents as compared to E-signatures and also require greater time to prepare the physical signing packages. E-Signature documents are also faster to deliver using digital platforms like email or file-sharing services.

The other benefit of e-Signatures is that they enable fully remote work. Working remotely has been increasingly common since the COVID-19 pandemic. The recent pandemic has shifted in-place office work to remote work. Remote work can be done efficiently with e-Signatures. E-Signatures can be affixed digitally to the documents without the traditional face-to-face meetings. Face-to-face meetings are now substituted by virtual meetings through video calls.

E-Signatures allow consumers to feel secure with their documents signed safely using e-Signature software. E-Signature software provides extensive authentication and security features to ensure the safety of the signed documents.

Signed documents’ statuses can be easily tracked using e-Signatures. E-Signatures can be used to manage and track the signing process. The signing process must be quick and efficient in order to streamline essential business transactions.

E-Signatures, through the e-Signature apps, can be accessed on both computer and mobile platforms. Computer and mobile platforms can utilize e-Signatures in signing documents quickly and anywhere, which can save time and patience for both parties.

Is e-Sign Legally Binding?

Yes, e-Sign is legally binding since the U.S. Electronic Signatures in Global and National Commerce Act was passed into law in 2000. This law states that e-Signatures are legally binding in every State where federal law applies.

Where federal law does not apply, most states adopted the Uniform Electronic Transactions Act (UETA). UETA gives a legal framework for the use of e-Signatures and helps ensure that they are just as enforceable as handwritten signed documents.

HIPAA rules have established conditions for e-Signatures. These conditions are the following:

• Legal compliance means that the contract, document, agreement, or authorization must not only comply with the federal rules for e-Signatures but also clearly demonstrate the intent of the signer, including the option to receive a printed or electronic copy of the contract.
• User authentication means that covered entities must establish a system to validate the identity of all transacting parties to avoid disputes regarding authority in entering into an agreement.
• Message integrity means that a system to prevent digital tampering with agreements must be implemented to ensure the integrity of an agreement.
• Non-repudiation means having timestamped audit trails, including dates, times, locations, and chains of custody are essential to ensure that the signer cannot deny having signed the agreement.
• Ownership and control mean that the final condition for e-signatures to be utilized under HIPAA rules must relate to the copies of signed documents located on the servers of e-Signature service providers.

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