COVID-19 spurs digital transformation and electronic use and acceptance

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eSignature and ePayment News and Trends

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While the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) (adopted in 50 US jurisdictions) have enabled the use of electronic signatures and records for most consumer and commercial transactions for close to 20 years – indeed, June 30, 2020 will be the 20th anniversary of the enactment of ESIGN – the COVID-19 pandemic, requirements for social distancing and numerous stay-at-home orders have thrust businesses into doing business remotely. Many companies have had to transition overnight to using electronic signatures and records for most transactions.  In addition both federal and state governments reacted quickly by enacting laws and issuing executive orders or COVID-19 guidance aiming to provide flexibility for addressing ink signature and original requirements and to enable remote online notarization capability.

Although the benefit of using electronic records and signatures can be significant, companies that are moving to digital operations are strongly encouraged to approach this change with an understanding of the regulatory requirements associated with using electronic records and signatures, as well as some of the best practices for doing so.

Businesses will need to consider numerous other elements, many of which have analog counterparts but some are unique to the digital realm. These elements include:

  1. determining authority to sign
  2. authenticating the signer
  3. capturing the recipient’s consent to receive and use electronic records and signatures
  4. delivering and presenting electronic records
  5. attributing the signature to a particular person and
  6. record management. 

Even if counterparties or governmental agencies permit ink signatures to be scanned and emailed, businesses are encouraged to fully consider these six principles to ensure enforceability and to meet compliance obligations.

For a more detailed analysis of going digital, please see our prior publication, So you want to go digital.

If you have any questions regarding these requirements and their implications, please contact any of the authors or your DLA Piper relationship attorney.

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This information does not, and is not intended to, constitute legal advice.  All information, content, and materials are for general informational purposes only.  No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.