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Press Release Friday, June 30, 2000 |
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Consumers Union offers tips before you sign your name on the
"digital" line
Washington, DC - Computer-savvy consumers will soon be able to buy
cars, close mortgages, and sign off on insurance policies without
signing a sheet of paper, as President Clinton signs an "electronic
signatures" bill into law.
"Today marks a major milestone for e-commerce," said Frank Torres,
legislative counsel for Consumers Union. "The potential for Internet
companies looking to sell big-ticket items online is enormous. Now
the question is whether companies can assure consumers that these
transactions can will be carried out safely and securely."
The law will allow consumers and businesses to use the Internet to
agree to many types of major transactions. People will be able to
authorize contracts electronically instead of using their own
handwritten signatures. Companies will also be able to send
customers product notices, balance statements, and other disclosures
electronically instead of through the postal service, although
consumers can choose to receive paper documents instead.
The law does not address how a consumer will actually obtain an
electronic signature, nor does it address the security of electronic
contracts.
Torres said the law is not ideal, but it does offer consumers some
protections to safely conduct their business online. "This law does
an adequate job of ensuring that consumers will be reasonably
protected when they sign a contract using the Internet," he said,
"but there are challenges ahead to ensure that consumers' digital
signatures aren't stolen or abused.
"When lawmakers wrote this bill, they chose to wait to address
certain issues until companies have further developed the technology,
such as how people's electronic signatures will be protected from
theft and fraud. Online privacy is not a reality. Consumers need
assurances that their private information will remain private. Given
the past resistance of companies to tough privacy regulations,
government must play a role in this process.
"The law does address other areas of consumer protection that we
believe are satisfactory. The law 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 right hardware and software to read the notices.
A consumer can withdraw consent and request paper documents at any
time, but the business can charge a fee for doing so. The law 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.
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.
