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Press Release Wednesday, June 14, 2000 |
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Washington, DC - The House of Representatives today is set to
approve the final version of "electronic signatures" legislation, a
bill to give "digital" contracts the same legal status as
pen-and-paper contracts.
Once the House passes the bill, the Senate is likely to give its
approval, paving the way to the White House, where President Clinton
is expected to sign the bill into law.
The bill would allow consumers to use the Internet to agree to
many types of major business transactions, such as purchasing a car,
buying an insurance policy, or closing a mortgage. Consumers could
"sign" a contract electronically without using pen and paper. Ongoing
notices, statements, and other disclosures could be sent and received
electronically as well.
The bill does not address how a consumer will actually obtain an
electronic signature, nor does it address the security of electronic
contracts.
Frank Torres, legislative counsel for Consumers Union, said the
bill is not ideal, but it does offer consumers some protections to
safely conduct their business online.
"This bill does an adequate job of ensuring that consumers will be
reasonably protected when they sign a contract using the Internet,"
Torres said, "but you should always be careful and cautious before
you sign your name on the digital line."
The bill says consumers must give their consent to receive
documents electronically. The consumer always has the option of
receiving paper documents instead. If a consumer chooses to receive
electronic notices, the company must verify that the consumer has the
proper hardware and software to read the notices. A consumer can
withdraw consent and request paper documents, but the business can
charge a fee. The bill also says certain urgent notices -- such as
utility shut-off, foreclosure, and default -- must be sent only on
paper in order to ensure that consumers do not miss critical notices
simply because their computers were down.
As the bill nears approval in Washington, state governments are
considering another e-commerce measure called the Uniform Electronic
Transactions Act (UETA). Consumers Union believes the federal bill
contains stronger standards for consent, disclosure, and document
tampering than UETA, which some states have already passed.
Consumers Union believes any state that moves forward with UETA
should make it clear in that does not intend to interfere with the
consumer protections of the federal "e-sign" bill.
Consumers Union, publisher of Consumer Reports magazine, is an
independent nonprofit testing, educational and information
organization serving only the consumers. We are a comprehensive
source of unbiased advice about products and services, personal
finance, health, nutrition and other consumer concerns. Since 1936,
our mission has been to test products, inform the public and protect
consumers.
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumers. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.
