Consumer Payment Card News

E-Sign in E-ffect

Beginning October 1st it is very important to read before you click because that is when the new E-Sign law goes into effect in the USA. Under the Electronic Signatures in Global and National Commerce Act, digital contracts that consumers agree to online will have the same legal status as pen-and paper contracts. The new law will make online contracts for a variety of business transactions, such as purchasing a car, buying an insurance policy, or closing a mortgage, more clearly enforceable. At the same time, it will allow businesses to satisfy their obligation to provide legally required notices to customers by sending those notices electronically, once the consumer provides consent for such online communication. If a consumer wants to revert to paper notices, the new law permits the business to charge a fee, as long as the fee was disclosed when the consumer first consented to electronic notice.

Consumers Union, publishers of Consumers Report, urged consumers to make sure they have the right to revert to paper notices without a fee if they don’t like getting information such as credit card statements electronically. Using email for legal notices may also create a special risk for consumers who don’t check their email regularly. The group cautioned consumers to refrain from giving out their email address to businesses unless they plan to check their email regularly and to avoid junk mail filters on their computer that might screen out messages from businesses authorized to send electronic notices. See the attached list for a complete set of consumer tips. The new law broadly authorizes electronic records and electronic signatures as legally effective. But it does not identify the technology that must be used for an electronic signature. Instead, it defines an electronic signature as an electronic “sound, symbol, or process” attached to a contract or other record which was “executed or adopted by a person with the intent to sign the record.”

The E-Sign law contains some special consumer protections before businesses can send notices required by law to customers by email in place of paper notices. First, the consumer must consent or confirm a prior written consent electronically. The manner of consenting electronically must demonstrate that the consumer will be able to access the future information in the form in which it will be sent. Second, companies that send electronic notices must tell the consumer what hardware and software is needed to read them. Finally, under the federal law, businesses must continue to send paper notices for urgent matters such as utility shut-off, foreclosure, eviction, some loan default notices, and product recalls. This rule is designed to ensure that consumers do not miss critical notices because a computer problem prevented the consumer from receiving or opening the notice.

The federal law allows its consumer protections to be displaced by state law if a state enacts the Uniform Electronic Transactions Act (UETA). The federal law contains stronger standards for consent, disclosure, and document tampering than UETA, which some states have already passed. Consumers Union advises any state legislature which adopts the UETA in the future to clearly indicate that it does not intend to displace the federal consumer protections.

Consumers Union’s Tips for Consumers When Using Electronic Signatures to Sign Online Contracts

Don’t give your email address to any business unless you are willing to check your email regularly and to read the notices you get from that business.

Use only one email address for all your personal business and close unused email addresses.

Place your order for merchandise offered at a web site by toll free phone or other method if you don’t want to enter into an online contract.

Watch for the screen that many online merchants offer which allows you to check “yes” or “no” to future advertising offers. Often this is automatically checked “yes” unless you change it. You may have to wade through the advertising “junk” from entities you do business with to find the notices that affect your legal rights.

Read the description of what software and hardware you will need to access future electronic notices.

As with any contract, read the fine print. Don’t agree to a contract that you don’t understand.

Print your order, confirmation screen, and any electronic notices you receive and keep the hard copies for later use.

Keep a list of the businesses with whom you have consented to receive electronic notices, and notify those businesses if your email address changes.

Be sure to notify a business which is providing you with goods or services if you can’t open the email you receive from that business. Do not dismiss these emails as junk mail — they could have important information about your legal rights.

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