Saying it would 'open up new frontiers of economic opportunity while protecting the rights of American consumers,' President Bill Clinton Friday signed the Electronic Signatures in Global and National Commerce act, or E-Sign.
Saying it would "open up new frontiers of economic opportunity while protecting
the rights of American consumers," President Bill Clinton Friday signed
the Electronic Signatures in Global and National Commerce act, or E-Sign.
The bill, which Congress passed two weeks ago, puts the force of national
law behind electronic signature transactions.
E-Sign will render digital signatures legally equivalent to those signed
on paper, laying "the basic legal foundation for e-commerce," according
to Steve Boyd of the White House press office. The new law will bolster
e-commerce by eliminating companies' fears about the enforceability of online
commerce, according to a statement released by the White House.
Electronic signatures — unique pieces of encrypted code assigned to
individuals to avoid forgery and theft — can be used online in all applications
where paper and ink counterparts would be accepted offline. Uses include
signing financial applications, bills and legal documents. Replacing paper
documents with electronic ones will, according to the White House, greatly
speed online processes, such as mortgage applications, and some purchases,
such as insurance. The statement also noted that digital signatures will
allow companies to replace paper records with electronic ones.
The bill, which passed 426-4 in the House of Representatives and 87-0
in the Senate, requires that consumers give their consent to use electronic
versions of paper forms, and it allows them to opt for offline equivalents.
In addition, businesses and government agencies must disclose to users the
hardware and software required to perform the electronic signing, and the
user must be given the same legal protections online as they would have
Clinton said the new law was necessary because old laws were "holding
back" e-commerce by relying on ink and paper for legally enforceable documents.
A digitally-encrypted unique private key will be assigned to each user;
it, in turn, can only be decoded by holders of a public key, such as businesses
or government agencies.
Fittingly, after Clinton signed the bill with a quill pen, he also signed
the bill electronically, using a smart card.
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