The United States Congress passed The Electronic Signatures in Global and National Commerce Act (ESIGN), which reified the use of electronic signatures in the enterprise. Although not new to the organizational landscape, organizations are failing in large numbers to utilize the benefits of digital signatures that this Act imparts unto them.
The purpose of this act is to keep commerce, law, and technology in alignment, stating that digital and electronic signatures are as legally binding as their traditional, paper-based counterpart signatures.
The Act specifies that images of a handwritten signature, a typed name in cursive font, or the drawing of a signature with either a mouse or a finger in digital format, all equate to legally binding signatures. However, although digital signatures and electronic signatures are terms used interchangeably, there is a legally relevant difference between the two, and are distinguished as follows:
An electronic signature is only the concept as the law interprets it, and is a capturing and representation of someone’s intent. For it to be an admissible concept in court, however, it does not differ much from traditional signatures: it must specify and give proof for who signed the document, and what document was signed.
A digital signature, however, specifies the underlying encryption technology as it pertains to the electronic signature. Although it works in tandem with an electronic signature, it cannot in and of itself be considered an electronic signature. It merely “authenticates” the signature as a legal representation of the intent of the person who signed it. Requiring use of an authentication key, a digital signature cannot be forged unless the signer loses the authentication key.
Many of the few documents that cannot be signed electronically are irrelevant to organizations, but important to family law. Content and documents governing adoption, divorce, or family law require notaries (agents that digital and electronic signatures do not provide in-situ technologies for).
However, this act was recently amended to allow digital signatures for income tax forms 8878 and 8879, and Section 101 of the E-Sign Act, under Subsection B, preserves the rights of individuals to opt out of using digital signatures or electronic signatures if they wish—keeping the signature process open and accessible to all citizens, businesses, and organizations. In other words, digital signatures are not mandatory, nor can they be made mandatory, but they are more efficient and just as legally binding. Some statistics have even shown that businesses can increase sales using digital signature integrations.
However, the original format of some documents such as paper certifications must be retained to ensure compliance. It is not transforming the file type from paper to digital format via document management software that raises legal concerns; it is the disposing of paper certifications once uploaded to digital format that does.
If a printed file is uploaded in a scanner via DMS, and then the original paper version of the document is subsequently disposed, re-printing the document, in some cases, will compromise its legal admissibility. A surefire way to keep records compliant in DMS is to retain certifications in their original format—even once scanned and uploaded to the DMS.
Although this law is over a decade old, it has taken technology and the organizations susceptible to it time to accustom themselves to the law’s stipulations.
This law, in layman’s terms, says that digital and electronic signatures are just as good and binding as their paper counterparts. Videos showing the signing process of a document, an image of your handwritten signature, typing your name in cursive font, and drawing your signature either with a mouse or by dragging your finger on a touchscreen, all qualify as digital signatures. To clarify, there is a difference between electronic signatures and digital signatures. An electronic signature is more inclusive, spanning anything that constitutes a digital marking.
A digital signature, however, is more specific and of greater legal admissibility, as it legally “authenticates” signatures—requiring use of an authentication key, meaning the signature cannot be forged unless the signer loses the authentication key. Even so, the speed at which business is transacted over electronic and digital signatures alike is quick enough to provide minimal time to lose this authentication key.
The only documents that cannot be signed electronically tend to not pertain to organizations, but rather documents governing adoption, divorce, or family law, which oftentimes require notaries (agents that digital and electronic signatures do not provide in-situ technologies for). The law was recently amended to allow digital signatures for income tax forms 8878 and 8879, and Section 101 of the E-Sign Act under Subsection B currently preserves the rights of individuals to opt out of using digital signatures or electronic signatures. In other words, digital signatures are not mandatory, nor can they be made mandatory.
A few more stipulations to keep in-mind: The original format of some documents, particularly paper certifications, should be retained to ensure compliance. It isn’t transforming the file type from paper to digital format via a DMS solution that raises legal concerns; however, it’s the disposing of some paper certifications once they are uploaded to a digital format that does.
Note that if a printed file is uploaded via a scanner to document management software, and then the original paper version of the document is thrown away, re-printing the document, in some cases, will compromise the legal admissibility of the document.
The safest way to keep records compliant in DMS use is to simply retain certifications in their original format—even once uploaded to the DMS system.