eSignature and ePayment News and Trends

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eSignature and ePayment News and Trends

eSignature and ePayment News and Trends


A fact of business today is that customers – both consumers and other businesses – and employees expect to transact digitally. To remain competitive, companies find themselves increasing their efforts to digitally transform their businesses.

Successfully implementing this transformation requires careful planning to ensure regulatory compliance, a smooth integration with existing business technology and a positive customer experience.

This bulletin is the fourth in a series aiming to help companies identify important and significant news and legal developments impacting digital offerings. Each issue will feature in-depth insight on a timely and important current topic. In this issue, we look at the importance of capturing the customer's intent to sign a document electronically. In addition, we will cover recently enacted federal and state laws, federal and state regulatory activities, fresh judicial precedent and other important news.


Under US law, the creation of a signature includes an element of intent. For example, Article 1 of the Uniform Commercial Code defines a signature to include "any symbol executed or adopted with the present intention to adopt or accept a writing." ESIGN and UETA both adopt this emphasis on intent to the digital environment by defining an electronic signature as "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record." Failure to establish intent means that while the person's actions may manifest assent to, or agreement with, a record, the record has not been signed. If the intent is not established and the underlying law governing the transaction requires that the record is signed, then the record may not be enforceable. Find out more.



  • House and Senate introduce the 21st Century Integrated Digital Experience Act: On May 10, 2018, Congressman Ro Khanna (D-CA) along with 15 co-sponsors (eight Republican congressmen and seven Democrat congressmen) introduced 21st Century IDEA (H.R.5759) in the House of Representatives. The legislation addresses federal agency website modernization, digitization of all public-facing services and transition from paper-based forms to digital, and promoting the use of electronic signatures. On June 12, 2018, Senator Rob Portman (R- OH) introduced the Senate version (S.3050), which is identical to the version introduced in the House.



  • Rhode Island adopts an adapted version of the Revised Uniform Law on Notarial Acts: On June 29, 2018, the governor of Rhode Island signed into legislation a law that adopts an adapted version of the Revised Uniform Law on Notarial Acts. Under the new legislation, Rhode Island allows notaries to perform electronic notarizations, provided that if the commissioning agency sets standards for the approval of technology used to perform notarial acts related to electronic records, the technology used by the notary must conform to the standards.
  • Michigan enacts law permitting remote notarization: On June 28, 2018, the governor of Michigan approved legislation that legalizes the use of remote notarization. Specifically, the law requires that, beginning March 30, 2019, the Secretary of State and the Department of Technology, Management, and Budget to review and approve remote electronic notarization platforms, and that if Fannie Mae or Freddie Mac approve a particular platform, that Michigan will approve the platform for use unless affirmatively disavowed by the secretary. To perform remote notarizations, the notary must comply with the identification, record keeping, and journal requirements, as well as others specified in the law. Michigan is the ninth state to legalize remote notarization and the fifth in 2018. See the previous analysis of Indiana, Minnesota, Tennessee, and Vermont.


  • Rhode Island authorizes electronic recording for real property and land records: On June 29, 2018, the governor of Rhode Island signed into legislation a law that authorizes a city or town clerk/recorder of deeds, at the clerk's/recorder's option, to accept electronic documents for recording real property and land records and to index and store those documents.

Regulatory Developments

GAO releases report on artificial intelligence: In late March, the GAO released a report titled "Artificial Intelligence: Emerging Opportunities, Challenges, and Implications." This report represents the results of a Comptroller General of the United States forum on recent developments in the area of AI. Four sectors participated in the forum – cybersecurity, automated vehicles, criminal justice and financial services. Forum participants noted that AI posed a range of opportunities and challenges. For example, forum participants noted that if the data used by AI is biased or corrupted, the results could cause harm. Further, if AI adoption becomes widespread, there are questions about whether current laws and regulations are adequate. Forum participants noted additional policy issues that require further attention as well areas that require further research.



NYDFS issues virtual currency license to BitPay, Inc.: On July 16, 2018, New York State Department of Financial Services (NYDFS) approved BitPay Inc.'s application for a virtual currency license. BitPay is authorized under the license to offer clearing and settlement services to merchants that accept payment or issue payment in bitcoin. BitPay is the first wholesale payments processor to be approved for a license.

FINRA encourages firms to notify FINRA if they engage in activities related to digital assets: In July 2018, FINRA released Regulatory Notice 18-20 to encourage firms to promptly notify FINRA if it or its associated affiliates engages or intends to engage in activities related to digital assets, such as cryptocurrencies. Further, until July 31, 2019, FINRA encourages firms to keep FINRA abreast of changes in case the firm determines to engage in activities related to digital assets that it did not previously disclose.



State courts continue to uphold the validity of electronic signatures: In the following cases, courts upheld the validity of electronic signatures, usually with minimal discussion:

  • State v. Bowers, 2018 WL 3153468 (S.D. June 27, 2018) – finding that an electronic signature on an affidavit is legal in South Dakota because South Dakota's UETA allows for the use of electronic signatures in actions between two or more persons relating to the conduct of governmental affairs.
  • Gillis v. Harris County, 2018 WL 3061302 (Tx. Ct. App. June 21, 2018) – finding that the Texas Rules of Civil Procedure recognize an "/s" followed by a typed name to be a valid electronic signature for unsworn declarations.


  • US Court of Appeals for the Ninth Circuit finds that CAN-SPAM preempts California's unsolicited email law: In Silverstein v. Keynetics, Inc., 727 Fed. Appx. 244 (9th Cir. 2018), the court concluded that the plaintiff's claims that commercial emails sent via a social networking platform violate California's unsolicited email law are preempted by the CAN-SPAM Act. To determine that CAN-SPAM preempted California law, the court addressed two issues. First, the court held that the use of the social network's domain name was not materially false or misleading within CAN-SPAM because the parties do not dispute that the emails originated from the social networking site. Second, the court held that the "From" names were not materially false or misleading where those names did not "spoof" the identities of persons known to the recipient, were accompanied by accurate domain names and subject lines and made clear that the e-mail was commercial in nature.
  • Defendant did not breach contract when it scraped plaintiff's website because "browsewrap" did not establish an enforceable contract: In Alan Ross Machinery Corp. v. Machinio Corp., 2018 WL 3344364 (N.D. Ill. July 9, 2018), the plaintiff alleged that the defendant scraped sales listings from the plaintiff's website and duplicated those listings on its website. The plaintiff brought five causes of action, including a breach of contract claim. The plaintiff's terms and conditions were presented as a "browsewrap" agreement, meaning that users were not required to expressly agree to the terms of the agreement, but were purportedly bound by the terms when visiting or navigating the website. The court noted that browsewrap agreements had been held enforceable when the user has actual or constructive knowledge of their terms. Here, the court held that hyperlinking the terms at the bottom of every page is not sufficient to provide adequate constructive notice to create a contract, because such a link, standing by itself without some additional act of notification, is insufficiently conspicuous to provide notice. Therefore, without allegations that the defendant had actual notice of the terms' existence, they do not create an enforceable contract. With no enforceable contract, the plaintiff failed to state a breach of contract claim.
  • Court denies motion to compel arbitration based on facts raised in plaintiff's affidavit: In Andre v. Dollar Tree Stores, Inc., 2018 WL 3323825 (D. Del. July 6, 2018), the court denied the defendant's motion to compel arbitration and stated that the parties were entitled to limited discovery because of factual assertions made within the plaintiff's affidavit. The defendant argued that the electronic acknowledgment indicating that the plaintiff accessed the arbitration agreement was sufficient to establish that the plaintiff agreed to arbitration because the plaintiff needed to use certain credentials to access the agreement. Specifically, the plaintiff needed to input his or her last name, the last four digits of the social security number, the plaintiff's clock ID number, the store number, and the work address. The plaintiff countered that employee password numbers were kept in a black book in the manager's office and that in the past, management had used these unprotected passwords to complete surveys and tests on the employees' behalf. Because the plaintiff's affidavit presented specific factual allegations that called into question whether there was an agreement to arbitrate, the court stated that the parties were entitled to a limited discovery and that after the discovery was completed, the court would allow the defendant to renew its motion to compel arbitration.
  • Class action dismissed because tracking keystrokes not an illegal wiretap: In class actions suits against an online mattress seller and two clothing retailers, the plaintiff alleged that website visitors had its electronic communications – such as mouse clicks and keystrokes – intercepted by defendants. The court held that the allegations are not an illegal wiretap under the Electronic Communications Privacy Act because that law is a one-party consent statute and the defendants consented to the tracking. Next, the court held that the collection of keystrokes did not violate the Stored Communications Act because the only electronic storage is alleged to be on personal devices, and such storage is not within the scope of the Stored Communications Act.

Federal courts continue to uphold the validity of electronic signatures: In the following cases, courts upheld the validity of electronic signatures, usually with minimal discussion:
Fielding v. Dolgen, LLC, 2018 WL 3037425 (E.D. Va. June 19, 2018) – The defendant's electronic records show that the plaintiff selected the option to review the arbitration agreement within 30 days and either opt out or be bound by it and then signed the document. The court concluded that such evidence combined with the plaintiff's admission that she paid minimal attention to the forms that she signed and that she failed to opt-out means that the plaintiff is bound to the agreement.


On June 20, 2018, Margo Tank and David Whitaker presented at the MERS User Conference in Reston, Virginia on "Enforceability of eNotes."

On July 13, 2018, David Whitaker discussed the Keynote Topic at the USFN 2018 Legal Issues in Mortgage Servicing Seminar on "E-Signatures and Electronic Loan Documentation in Real Estate Finance."


M. Tank and D. Whitaker, The Law of Electronic Signatures, Thomson Reuters (2018 Edition)

M. Tank, D. Whitaker, P. Fry, "Smart" Contracts, Blockchain & Commercial Law, Chamber of Digital Commerce (with contributions from A. Grant) (2018)

In this issue