Realty Times: Digital Signature Law Needs Disclosures

March 9, 2000

Digital Signature Law Needs Disclosures
by Broderick Perkins

A true all-Internet home buying or selling transaction is impossible without digital signature law, but current legislation doesn't go far enough to protect consumers.

If current digital signature legislation remains intact and passes into law, consumers could lose protections they now enjoy from brick and mortar companies, says consumer advocacy stalwart Consumers Union.

"People who shop on the Internet should get the same consumer protections as people shopping at the mall, the bank, the car lot, or any other business," said Frank Torres, legislative counsel for Consumers Union, the publisher of Consumer Reports magazine.

Giving computer-generated signatures the legal weight of ink-and-paper signatures could send e-commerce skyrocketing, but consumer problems and complaints could hit the ceiling if disclosures aren't part of the package, Torres said.

Lawmakers are currently working to compromise two related bills, a House version, HR 1714, and a Senate version, S. 761. The House bill, says Torres, most needs provisions for consumer protections, Torres said.

Consumers Union is lobbying for the final version of the bill to contain five key consumer protections.

On-line businesses should be just as obligated as brick-and-mortar businesses to disclose product safety, late fee and payment schedule information, among other disclosures.

The bill should require businesses inform consumers about the implications of receiving disclosures via the Internet. The business should make certain the consumer has the ability to receive and read the notices. An e-mail message may be unreadable because the recipient does not have the proper software, particularly if the notice is sent as an attached file. Businesses should first send a preliminary e-mail to ensure that the consumer can open and read future notices.

That could be tough for the real estate industry, fond of the convenience and speed provided by attached files. Some software, including Microsoft's Office suite of software, "teaches" you to send attached files with software features that allow you to attach files from within the software. Electronic signatures aside, the practice is discouraged for the same reasons Consumers Union wants the provision in the new law. Attached files also hide computer viruses.

The bill should ensure that some important notices, such as notices of default, are sent in a form that allows the receipt to be verified by the sender. If an electronic notice is not verified, businesses should be obligated to check to see if the consumer is received the messages via e-mail. Businesses should consider sending urgent notices, such as foreclosure and utility shutoff, through traditional mail.

The bill should allow federal agencies and state governments to implement this law so that existing consumer protections remain intact and are not circumvented.

The bill should ensure that documents received by consumers online would be admissible in court, should the need arise.

"Digital signatures will go a long way toward helping e-commerce grow and succeed, but only if consumers can use them with the confidence that they will get the proper notices and disclosures about their online transactions," Torres said.

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