House Schedules Vote on Digital Signature Bill

WASHINGTON (06/12/2000) - The U.S. House of Representatives is scheduled to vote Tuesday on a bill that information technology industry officials believe is needed to stimulate the growth of digital signature technology.

The Electronic Signatures in Global and National Commerce Act (E-SIGN), a compromise between similar House and U.S. Senate digital signature bills, is expected to pass when it comes up in the House Tuesday. The Senate also is expected to vote in favor of E-SIGN, and U.S. President Bill Clinton has said he will sign the act. The bill received overwhelming bipartisan approval last week from the joint House-Senate Conference Committee.

The bill, which has been a top priority for the Washington lobbyists of many high-technology companies, would recognize many types of digitally signed documents as legally binding provided consumers first agree to receive them in digital form.

The legislation would affect a wide range of documents, including mortgages and bank statements. However, highly important and sensitive documents, such as a notice of termination of healthcare benefits or electrical power, would still have to arrive in the regular mail.

Supporters of the bill say it will provide the confidence that consumers and businesses have been looking for to conduct more transactions online.

"We really view it as something that is going to be essential to not only continue the growth of e-commerce, but to ramping it up to a whole new level of development," said Mark Brailov, public communications director for the American Electronics Association (AEA).

High-tech companies are also pleased that the bill attempts to discourage a patchwork of U.S. state laws governing the acceptance of digital signatures by making it illegal for a state to deny the effectiveness of a digital signature solely because it is electronic in nature.

The consent provision of the bill requires that consumers first must agree to enter into electronic transactions and then affirmatively consent to continue to receive them in an electronic form. Under the terms of the bill, a business also must take reasonable steps to make sure consumers will be able to open a digital document, and if the business replaces its software, it must notify the consumer and give him or her an option to end the arrangement.

"I think the bill is a very good bill. There were some tough negotiations in the home stretch," said Marc Berejka, corporate attorney for Microsoft Corp.

"At the end of the day, everyone seemed satisfied with where the bill ended up."

Berejka said the bill is designed to clear the way for new forms of electronic commerce, including those designed to attract consumers by offering better prices than those provided by brick-and-mortar stores.

Previous versions of the bill had raised concerns among consumer advocates, but revisions that came about in the Conference Committee dispelled the worst of them, said Margot Saunders, managing attorney of the National Consumer Law Center.

"It's a lot better than it could have been, but clearly there are going to be significant problems that will result from this bill that will require further legislation," she added.

Saunders said problems will arise where electronic commerce intersects with the physical world. For example, there's nothing in the bill that would prevent a business from charging higher prices to consumers who don't consent to receiving documents electronically.

If it's going to cost more to have all the documentation of a sale on paper, people with access to the Internet most likely will agree to download the contract, disclosures and other forms from a Web site, Saunders said. "But, it's altogether different for someone (who doesn't have a computer hooked up to the Internet) to have to go to a library and download them," she added.

The House-Senate Conference Committee's summary of the bill said it assures consumers in the electronic world the same rights they enjoy in the paper world. Existing consumer protection laws remain unaffected, according to the summary. The act would take effect on Oct. 1 if passed and signed by the U.S. president.

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