Digital-Signature Legislation Expected by Year-End

WASHINGTON (05/05/2000) - Congressional action on some high-tech-related issues, such as H-1B visas and Internet taxation, has been advancing slowly.

But one piece of legislation that's nearing the finish line is a digital-signatures bill.

Contentious consumer-protection issues - such as determining what types of notifications can be sent electronically - still need to be resolved before digital signatures can gain the same legal status as written ones. But last week, a key Republican lawmaker and a U.S. Department of Commerce official both predicted the legislation would be approved.

"Were going to get it done by the end of the year, even if we have to settle for half a loaf," said U.S. Rep. Tom Davis, a Republican from Virginia. "We're not going to let this die."

If an agreement on digital-signature legislation isn't reached, the impact will depend on the type of financial transaction being conducted.

"I can buy and sell stocks online today without a digital signature. I can pay bills without a digital signature," said Bill Bradway, an analyst at Meridien Research Inc. in Newton, Massachusetts. It's the big-ticket consumer purchases such as mortgages and automobiles that can't be easily finalized online without digital-signature legislation, he added.

The companies that would be hurt most by the lack of a consistent national legal standard are those in financial services, where digital signatures need to have the same legal validity as written ones in order to execute financial contracts online.

Digital signatures can play an important role in further advancing business-to-business e-commerce, said Bradway. But there are also alternative technologies available to authenticate customers, such as smart cards and biometrics.

Stamps Continue

But the absence of national legal recognition for digital signatures hasn't stopped Stamps.com Inc. from issuing stamps via the Internet.

Craig Ogg, chief technologist at the Santa Monica, California-based firm, said the company uses digital signatures to authenticate customers. It uses the technology to establish customer identity through financial checks and conducts all of its business online.

Ogg said a federal law is needed to supersede actions being taken by several states to approve digital signature measures that would establish different standards for areas such as security. "One of the things a federal standard would do is set a minimum bar [for security] that you need to meet," he said.

Because of its agreement with the U.S. Postal Service, Stamps.com follows rigid security standards in protecting digital-signature information.

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