In our digital world, many everyday transactions are validated by electronic signatures. They’re quick, easy, reliable, and even environmentally friendly.
But they must meet several requirements to be legal and aren’t without risks. To ensure data security and prevent document tampering, state, federal, and even international regulators have developed certain eSignature compliance standards that providers and businesses must follow. It’s essential that businesses abide by these requirements if they offer electronic signatures, so you should familiarize yourself with the ones that apply to you.
What Are eSignature Compliance Requirements?
eSignature compliance standards are the exact requirements for a valid electronic signature. The two primary pieces of legislation exist at the state and federal levels, but there are also international signature laws that vary somewhat from U.S. regulations.
JSign’s software can meet the eSignature compliance requirements of state, federal, and international laws, so here’s a look at all three.
Drafted in 2000, the Electronic Signatures in Global and National Commerce (ESIGN) Act is a federal standard that governs the use of eSignatures, especially when used in transactions across state boundaries. The ESIGN Act was a follow-up to eSignature compliance regulations drafted at the state level, so a great deal of overlap exists between the two.
The ESIGN Act defines eSignatures as “an electronic signature as an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
jSign has previously covered the exact requirements of the ESIGN Act, but these are a few of its components:
- Validation: Any law requiring a handwritten signature can be satisfied with an electronic signature.
- Legal merit: Because electronic forms are equally valid as physical documents, they can be presented as evidence in court.
- Enforceability: Their legal merit means that an electronically signed document may not be denied legal effect, validity, or enforceability solely because it’s an electronic form.
- Intent to sign: For an electronic signature to be considered valid, the signer must have demonstrated clear intent to sign the document, perhaps by writing their name, pressing a button, etc.
- Consent to do business electronically: This is typically indicated by checking an “I agree” box.
- Opt-out clause: The signer must be allowed to give their handwritten signature instead.
- Signed copy: All parties must have proof of the transaction.
- Record retention: This can include sending a copy of the document to the signer’s email address.
The ESIGN Act also requires that all information regarding other pertinent standards be included within a document using an electronic signature. For example, a document containing personal health information that’s electronically signed must also abide by relevant HIPAA regulations.
The Uniform Electronic Transaction Act (UETA) was drafted in 1999. It validated electronic signatures as equally legitimate as a “wet ink signature” and established regulations for what all parties must include within their digital forms. Similar to the ESIGN Act, some of the key electronic signature requirements listed in the UETA are:
- An electronic document or signature may not be denied legal effect or enforceability solely because it’s electronic.
- Contracts and other electronic documents may not be denied legal effect or enforceability simply because electronic records were used to help create them.
- If a law requires that a record or document possess a signature, an electronic record or signature satisfies said law.
The UETA was passed in 49 out of 50 states, Washington D.C., and other U.S. territories, with the only exception being New York. New York passed the Electronic Signature and Records Act instead.
While an electronic signature can ratify most contracts, some arrangements still require wet signatures to confirm them. These exemptions include:
- Birth or death certificates
- Wedding or divorce certificates
- Wills and codicils
- Testamentary trusts
These records still require a handwritten signature and sometimes even a notary to confirm, but electronic signatures are still an effective, safe method for verifying most agreements.
International Signature Laws
International governing bodies may have unique electronic signature laws as well. For instance, the U.K.’s Electronic Communication Act was approved in 2000 and completely codified in 2002 as part of the Electronic Signatures Regulations Act.
The European Union also has distinct legislation governing electronic signatures. Their framework, the Electronic Identification, Authentication, and Trust Services (eIDAS), affirmed that electronic signatures and documents are just as legitimate as physical ones. It also classified electronic signatures into three types: standard, advanced, and qualified.
Types of eSignatures
eIDAS’s requirements mean that not all signatures are created equal. Some are valid only in certain applications and carry varying degrees of weight. There are three types of signatures, and industries must maintain compliance with the signature type that applies to them.
The most common type of signature, the standard eSignature (SES), does not have the same degree of legitimacy as a wet ink signature. They do not require user ID verification and may include scanned signatures or simply clicking an “I accept” button. SESs can be used for most applications, from HR documents and employment contracts to commercial and loan agreements.
Advanced eSignatures (AES) are more secure than SESs. They identify the person who signed the document and are uniquely connected to them, created via a process that the signer alone can access. AESs are also linked to other data, meaning tampering with the original document will not go undetected.
Approved by governmental authorities, a qualified eSignature (QES) is generated via a highly secure signature creation device and is equivalent to a handwritten signature under all legal conditions. That means it can be used for any digital forms that allow an electronic signature to verify them.
How Encryption Technology Helps Verify Electronic Signatures
Many often wonder if electronic signatures are safe, and they are. Electronic signatures employ encryption technology to ensure that documents cannot be tampered with. The use of blockchain technology and digital certificates are just a few features that make eSignatures a very safe way to confirm a transaction so that personal data and all important records are kept secure.
The Bottom Line
Electronic signatures offer many advantages over handwritten ones, but businesses must abide by the regulatory requirements relevant to their context. Companies should determine which eSignature compliance requirements apply to them before implementing eSignatures to streamline their record verification process.