FTC Signs Off On E-Signature Consent Requirements

The FTC's report on consumer consent requirements in the E-Signature law are just fine--even if some E-commerce companies disagree.

InformationWeek Staff, Contributor

June 27, 2001

2 Min Read

If the Federal Trade Commission has its way, the consumer consent requirements in Esign, last year's E-signature law, won't be altered anytime soon. That was its recommendation in a report issued today, assessing the impact of the consumer consent provision.

Esign requires businesses to obtain consent before sending information electronically, and to confirm that consumers can access the electronic form to be used. (For example, if a document were sent as a PDF, an end-user would need software with which to open it, such as Adobe Acrobat.) Some E-commerce businesses complain that the steps needed to "reasonably demonstrate" consumer access are confusing, and discourage consumers from completing transactions. Still, the FTC said the requirement "appears to be working satisfactorily."

Anecdotal evidence suggests the provision can be a deterrent to E-commerce, says Behnam Dayanim, E-commerce attorney with Paul, Hastings, Janofsky & Walker. Even if someone opens a trading account with an online broker at a storefront office, and asks for electronic account statements, that individual would also need to confirm the request electronically. But there's no definitive evidence to prove that the provision is a serious E-commerce hindrance, Dayanim says. Besides, it's premature to draw conclusions about E-signatures because they've only been in use for about nine months and the adoption curve has been very slow. Don Rhodes, head of E-strategies Policy Management at the American Bankers Association, says that the consent provision hasn't been a problem for banks, but he adds that not many banks are actually issuing E-signatures yet (Bank of America is one exception).

The consumer consent provision can create headaches for companies if they change their electronic formats for users. A company using PDFs may decide to switch to a different format in a couple years--but when that happens they must receive new confirmations from all consumers to ensure they have access. Otherwise, the company can no longer send the information electronically.

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