From the web page:
http://www.nytimes.com/library/tech/yr/mo/biztech/articles/17digital.html

June 17, 2000

Electronic-Signature Bill Is Approved by the Senate
By LIZETTE ALVAREZ and JERI CLAUSING

WASHINGTON, June 16 -- The Senate voted unanimously today to approve a bill
that catapults electronic commerce to a new level by allowing consumers and
businesses to sign contracts online and know that their e-signature is just
as binding as one in ink.

The bill, which passed 87 to 0, has already been approved by the House and
now goes to President Clinton, who said today that he would sign it into law.

By giving electronic signatures the legal weight of paper signatures, the
new law will offer consumers the chance to sign legally enforceable
contracts for health insurance, bank loans and brokerage accounts over the
Internet, around the clock and with no delay.

Typically, consumers and businesses have to wait days or weeks for paper
contracts to be written, mailed, signed and then returned.

While many types of banking, insurance and brokerage accounts can now be
opened on the Internet, they still require a signature on paper for final
approval; that requirement will disappear. Until now, taxpayers who file
their taxes electronically with the Internal Revenue Service have still
needed to file a piece of paper bearing their signature.

Financial institutions and insurance companies are expected to save
billions of dollars a year by eliminating the cost of drawing up paperwork
and then mailing it. Most records will be retained electronically, doing
away with the need for giant warehouses of files.

As written in the bill, consumers will be able to choose whether to do
business online or on paper.

Certain legal documents will still have to be produced on paper. For
example, insurance and utility companies must still send cancellation and
termination notices through the mail, wills cannot be executed over the
Internet and products may not be recalled online. Also, mortgages must be
foreclosed on paper.

But while the legislation had overwhelming, bipartisan support on Capitol
Hill -- only 4 members of the House opposed the bill while 426 approved --
some consumer advocates expressed concern that the law would lead to new
types of fraud and identity theft.

"We haven't sat down to figure out how to protect consumers," said Margot
Saunders of the National Consumer Law Center. She said she worried that
without a requirement for a paper signature, criminals could easily "forge"
electronic signatures on everything from online purchases to credit card
applications.

"Consumers are left to prove a negative," she said. "Everything changes
with electronic signatures."

The law goes into effect Oct. 1, and consumers and businesses are expected
to take advantage of the law almost immediately.

Electronic-commerce companies, like E-loan and E*Trade, are all set to take
advantage of the legislation, and some of the larger traditional banks like
Citibank, which already do business on-line, are expected to make
adjustments quickly. A Baltimore company, eOriginal, has said that it will
offer completely electronic mortgages as soon as the law allows.

"The bill revolutionizes the way consumers, industry and government conduct
business over the Internet," said Senator Spencer Abraham, a Michigan
Republican, who helped steer the bill through Congress. "It is a tremendous
cost-cutting tool because people and businesses can now enter contractual
arrangements without having to drive across town, fly thousands of miles
for a meeting, or mail reams of paper back and forth."

But in a nod to Democrats and to consumer rights' organizations, the bill
also helps protect the millions of people who do not have access to the
Internet or who worry about being defrauded in cyperspace.

"This landmark legislation will ensure that consumer protections remain
strong in the technology age," Mr. Clinton said today. "It will help create
new rules of the road for America's high-tech community."

The bill does not specify exactly what a digital signature will look like,
allowing companies, and ultimately the free market to decide what kind of
technology works the best.

A signature could simply be strings of numeric code that are encrypted --
scrambled and unscrambled -- or it could involve more sophisticated
devices, like scanners that read thumb prints or eyes.

Since many consumers remain nervous about conducting these kinds of
transactions online, it is likely many companies will try to improve
online security. Congress, too, has a role to play.

"There needs to be a lot more focus on watchdogging against hackers," said
Senator Ron Wyden, an Oregon Democrat, who helped draft the bill. "A hacker
today is sort of like the guy who goes around rattling all the windows and
doors in a neighborhood, and there is a pretty good chance he will find one
open."

Companies that develop this kind of security clearance online are already
scrambling to offer their services. One Utah company, iLumin, plans to
start offering a "digital handshake system" next week that would gather all
the parties involved in a transaction in a cybersigning room to help them
securely complete their negotiations.

"My mantra through this all was consumer rights can't be virtual rights,"
Senator Wyden said. "They have to exist in the real world."

The bill took several serious stumbles during negotiations between the
House and the Senate versions, mostly over consumer protections.

Companies said today that their paperwork savings as a result of the bill
would be matched by new convenience for consumers.

Tom Crocker, a lobbyist who represents Charles Schwab, the discount
brokerage firm, said the bill would save Schwab and its customers time and
money.

"If you open a Schwab account now, most of it can be done online," he said.
"But you still have to print it out and do a wet signature on the account
agreement." Under the law, the requirement of a paper signature is ended.

The bill is also expected to be a boon for so-called business-to-business
transactions. "For instance, an automobile manufacturer will be able to
have complete contract negotiations with parts suppliers online," said
David Colton, a lobbyist for the Information Technology Association of
America. "There are huge cost savings associated with this, and the cost
savings will ultimately be passed on to the consumers."


Electronic Signatures in Global and National Commerce Act
http://www.nytimes.com/library/tech/00/06/biztech/articles/17digital-s761eah
.html

Status of Senate Bill S761, from The Library of Congress

http://thomas.loc.gov/cgi-bin/bdquery/z?d106:SN00761:

United States Government Electronic Commerce Policy
http://www.ecommerce.gov/


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