Digital technology allows people to sign contracts or other important documents electronically. Yet many wonder whether this type of signature stands up in a court of law, or perhaps puts the signer at increased risk for fraud. Let’s take a closer look at e-signing.
What is an E-Signature?
An e-signature means you approve or agree to a non-printed document. You sign with your finger, mouse, or stylus for many credit card transactions. Typing your name on a document also serves as a digital signature quite often. But, signing a piece of paper and scanning, then copying and pasting into a document, is not a legal e-signature. An e-signed document means the signature is verified, coded, encrypted, and binding. Your signature becomes a unique message completing a contract, transaction, or other document.
Convenience of E-Signatures
Using an e-sign company for documents is the smart way to go. It’s a convenient and safe way of doing business for both you and your clients. Plus, you save money as you no longer have to send documents overnight. It also saves paper and prevents excess file cabinet storage. All U.S. states and most European countries accept e-signatures. The risk of identity theft is minimal. Paper documents, easy-to-guess passwords, and human error account for more identity theft than any other factor.
Are E-Signatures Legal?
E-signatures generally pass the legally binding test and most courts accept them without question. Unless there’s a specific provision in the law disallowing e-signatures, digital signatures are just as valid as signing in person. Former President Clinton signed the E-Sign Act of 2000 making e-signatures acceptable, legal, and valid. The European Union signed a similar law. Verification of e-signatures is a costly matter, though. Verifying personal data of the signee requires advanced equipment that must be continually updated when rules or regulations change. However, there’s an alternative.
Services for E-Signatures
In recent years, the popularity of e-signatures created a market for companies that verify them. These companies adhere to all the laws and guidelines for e-signatures and stay abreast of changes and updates to laws and industry regulations. That frees up valuable time for your staff who otherwise spend time tracking and updating e-signature software. Instead, hire a service to handle the monitoring and verification associated with e-signatures.
When looking for an e-sign company, make sure you understand the rules for validating e-signatures. Then, make sure the company you choose shows compliance with all laws governing e-signatures and your particular industry. E-sign companies validate the signee by verifying names, phone numbers, business and URL addresses, and possibly the last 4 digits of social security numbers or other identifying numbers. Then the company codes and encrypts the signature, keeping it secure from tampering. Witnessing and notarization are also done online today. Notaries have the ability to notarize and stamp the document online with a specially encrypted code key.
An e-signature company also tracks the document and alerts you to any changes made after your signature. Any changes made after you sign are noted and you’re alerted to the modifications, thus preventing changes from being overlooked.
As additional security when signing online, type your name in a special format such as /s/John Doe or /John Doe/ with the slash marks. The Federal court system and most government offices prefer documents with that notation as an extra guarantee of validity. The best way for verifying e-signatures is through companies compliant with the E-Sign 2000 Act. Using a service gives you backup documentation in case the e-signature ever comes into question — especially important when signing high-dollar contracts such as those in real estate.
When to Avoid E-Signatures
Lawyers recommend that a few documents still need signing in person. These documents include wills, adoptions papers, and bankruptcy papers. Many state laws specify which documents need ink signatures over e-signatures. Plus, if you do business in a country without a legal standard for e-signatures, it’s best to get ink signatures. This way your most important papers have authentic, unaltered signatures.
In today’s digitally enhanced world, e-signatures are commonly used. Make your life easier and ensure the validity of the signatures using a professional e-sign company.