E-signatures have become an integral part of the way businesses operate, making transactions faster. However, this convenience of e-signatures comes with its responsibility of ensuring compliance with various local and international laws. It is important to comply with these regulations to avoid legal pitfalls and maintain your business integrity.
There are various forms of e-signature —from simple typed names to complex digital certificates. Understanding the different types is the first step toward compliance.
Definition and Types of E-Signatures
E-signatures are electronic symbols or procedures connected to a document that indicate the signer’s intention to sign. which includes:
1. Simple E-Signatures: Basic forms like scanned signatures.
2. Advanced E-Signatures: Require unique identification and are linked to the signer.
3. Qualified E-Signatures: Advanced with additional security, similar to handwritten signatures under certain regulations.
Understanding E-Signature Regulations
Several key regulations govern the use of e-signatures, each with its own requirements and implications. The most prominent among these are:
The Electronic Signatures in Global and National Commerce Act (ESIGN Act)
ESIGN Act enacted in the United States in 2000, grants legal recognition to electronic signatures and records if all parties to a contract agree to use electronic documents and signatures. It states that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”
The Uniform Electronic Transactions Act (UETA)
It has been adopted at the state level in the United States and provides a legal framework for electronic transactions. It aligns closely with the ESIGN Act but offers more detailed guidelines for state-specific applications. UETA applies to transactions where parties have agreed to conduct business electronically and include measures for attribution, retention, and the formation of electronic contracts.
The eIDAS Regulation (Electronic Identification, Authentication, and Trust Services)
This regulation, which came into effect in the European Union in 2016, establishes a Europe-wide legal framework for electronic signatures, seals, timestamps, and other trust services. eIDAS distinguishes between three types of electronic signatures: simple, advanced, and qualified, each with increasing levels of security and legal standing. Qualified Electronic Signatures (QES) are recognized as having the same legal effect as handwritten signatures.
Other International Regulations
Countries like Canada, Australia, and Japan have their own e-signature laws, often inspired by ESIGN and eIDAS, necessitating global businesses to stay informed on multiple regulatory landscapes.
Compliance Considerations for E-Signatures
Several best practices should be followed to ensure that e-signatures are legally binding and compliant with relevant regulations
Consent and Intent
Both parties must consent to use electronic signatures and demonstrate a clear intention to sign the document electronically. This can be done by explicit agreements or consent processes included in the signing process.
Authentication
It is important to verify the identity of the signers to prevent fraud and ensure the authenticity of the signatures. This can be done through email verification, SMS codes, biometric data, or digital certificates.
Document Integrity
The document must be protected against tampering. Technologies like cryptographic hashing and digital certificates can ensure that any changes to the document after signing are detectable.
Audit Trails
Maintaining a comprehensive audit trail of the signing process is crucial for legal and regulatory compliance. This trail should include timestamps, IP addresses, and other relevant data that can be used to validate the transaction.
Storage and Accessibility
Signed documents should be stored securely and be easily accessible for future reference. Compliance with data protection regulations, such as GDPR in the EU, must be ensured to protect the privacy and security of the signers’ information.
Compliance with e-signature regulations is essential for maintaining your digital transactions’ legal integrity and security. Choosing the right platform is a critical step in this process. One option is Flowmono, where compliance with e-signature regulations is key. It gives 360-degree protection through secure, encrypted transactions and data storage. We have set up privileged access control and strong methods of authentication to ensure that digital transactions are safe and compliant. Your documents can be said to have been properly verified with strong verification methods. By choosing Flowmono, you also choose a secure, legal, and efficient platform that assures your e-signatures are compliant around the clock.
