In today’s digital environment, electronic signatures (E-Signatures) are becoming more and more prevalent. The E-Sign Act is a federal law that governs the use of electronic signatures. The E-Sign Act has been in place since 2000 and was amended by Congress in 2002.
In the United States, e-signing is a common method used to sign agreements and documents electronically. The E-Sign Act was created in 2000 to help establish legal requirements that must be in place when using this means of digital signatures. However, many companies continue to commit legal mistakes that may affect the validity of their e-signatures. Here’s an overview of the important issues you should be aware of under the E-Sign Act.
What is the E-Sign Act?
The E-Sign Act is a law that requires companies to use electronic signatures for certain transactions. If you’re a company that uses electronic signatures (such as a digital signature or electronic acknowledgement), then the E-Sign Act applies to you. Aside from federal government entities, all companies are required to comply with the E-Sign Act.
The E-Sign Act allows documents to be signed electronically and stored in an electronic format. This eliminates the need for physical signatures on paper documents.
Under the E-Sign Act, all companies must use electronic signatures or digital signatures when they:
- Sign documents that are intended to be legally binding.
- Use electronic signatures in place of physical signatures.
- Create an electronic record of a contract or other agreement.
- Use the electronic records in place of paper documents.
- Handle any document governed by federal law.
The Electronic Signatures in Global and National Commerce Act (E-Sign) sets forth rules for how electronically signed documents can be used in commerce within the United States and internationally. It also sets forth requirements pertaining to authentication services providers who verify validity of electronic signatures before they can be used by businesses engaging in interstate or foreign commerce.
What is e-sign compliance?
The E-Sign Act is a federal law that requires businesses, including notaries public and their employees who are acting on behalf of the notary, to sign certain documents electronically. By signing an electronic document, you acknowledge that you have read and understood the contents of that document before signing it. The E-Sign Act applies to electronic signatures (also known as e-signatures) created by means of digital signature technology or other similar technology used for authentication purposes.
It is important to note that the E-Sign Act does not apply to every type of signature; it applies only when those signatures are used for legal purposes such as contracts or affidavits.
In addition, the E-Sign Act does not apply if a document has been signed by hand but later scanned in an electronic format so that it can be shared electronically with others using tools such as email attachments or cloud storage services such as Dropbox or Google Drive.
When does the E-Sign Act apply?
The E-Sign Act covers electronic records and electronic signatures. Electronic records are any type of record that exist in a digital format, including emails, spreadsheets, contracts and other agreements. Electronic signatures are digital equivalents to handwritten signatures; they can be used to sign contracts or other formal documents.
The E-Sign Act applies to all types of agreements: employment agreements, shareholder agreements, merger documents and more—even for those stored in a digital format but not created electronically. It also applies regardless of whether you’ve signed an agreement on paper or you’ve clicked “I agree” on your computer screen.
How to manage e-sign compliance
The E-Sign Act is a federal law that requires all companies to have an e-signature system in place. It was created to protect customers from fraud by requiring that any document signed online be legally binding.
If you’re unsure about how to ensure compliance with the E-Sign Act, we can help! Here are some ways you can manage your e-signature compliance:
E-signature policies
- E-signature policies are another key element in ensuring e-sign compliance. These policies should be clearly defined and provide guidance on how e-signatures should be used in different situations, such as when they are required or optional, who can sign them, what they should contain, etc.
E-signature training
- E-signature training is another important aspect of managing e-signature compliance because it helps ensure all employees understand what is expected of them when using electronic signatures on documents.
E-signature management
- E-signature management refers to any processes or procedures related to managing all aspects of electronic signatures within an organization. For example, this could include monitoring how often employees are using them and documenting their results so that changes can be made if necessary (such as adding additional training sessions).
E-Sign Act Compliance
- E-Sign Act compliance is critical to any business that needs to send documents that require an electronic signature. The penalties for non-compliance can be steep, so it’s important to ensure your company follows the law.
After you understand the basics of the E-Sign Act, e-sign compliance and how it applies to your business, you can create a plan and start getting ready for the new law.
There are many ways to get started with electronic signatures. If you would like to learn more, Bankers Hub offers certification and training courses that can prepare any banking professional to handle E-sign compliance. If this sounds like something that would be helpful for your business or organization, contact us today!
