E-SIGN Act

 ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT

On June 30, 2000, Congress enacted the Electronic Signatures in Global and National Commerce Act⁽¹⁾ ("ESIGN" or "the Act"), to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. Careful to preserve the underlying consumer protection laws governing consumers' rights to receive certain information in writing, Congress imposed special requirements on businesses that want to use electronic records or signatures in consumer transactions. Section 101(c)(1)(C)(ii) of the Act requires businesses to obtain from consumers electronic consent or confirmation to receive information electronically that a law requires to be in writing. The Act went into effect in October 2000.

 Electronic Record Keeping

This advisory letter highlights issues regarding bank electronic record systems in light of the E-SIGN Act. 15 USC 7001, et seq. The letter provides a basic framework that bank management can use to assess and address key issues posed by electronic record keeping systems.

BACKGROUND

Federal legislation changed the legal framework for electronic records and will likely result in more banks adopting electronic record retention systems. Banks can implement electronic record retention systems in many ways to support different business processes. Some examples of possible electronic record retention systems are loan file imaging, retention of paperless applications and online agreements, and the use of electronic payment systems.