Study under Section 105(a) of the Electronic Signatures in Global and National Commerce Act Regarding the Effectiveness of Delivery of Electronic Records to Consumers Using Electronic Mail as Compared with the Delivery of Written Records

I.  Introduction

The National Consumer Law Center^[1] submits these comments on behalf of its low income clients regarding  the effectiveness of delivery of electronic records to consumers using electronic mail as compared with the delivery of written records. As this submission is on behalf of consumers, rather than business or industry, answering the questions posed in the Notice of this Study is not suitable to make our points.  

The use of electronic delivery mechanisms has certainly changed the way many people communicate and exchange information. Electronic mail is an extraordinarily useful  means of transferring ideas, conducting transactions, and conveying facts and proposals to large numbers of people easily and instantaneously. Electronic communication is undoubtedly changed the way commerce -- business as well as personal -- is conducted.  

Electronic communication is faster, cheaper, more adaptable and more secure in many instances that physical world delivery. The benefits of electronic communication are extensive, and are still being discovered. It does not diminish the extensive benefits of electronic communication, however, to articulate the differences between electronic delivery and physical world delivery. Nor should it diminish the benefits to illustrate the dangers of assuming both methods of communications are equally reliable in all contexts.  

The differences between electronic and physical world communications must be recognized, both to enhance the future improvement of electronic communication, and to ensure that individuals who do not have the same degree of access to electronic communications are not penalized for this lack of access. We welcome the continued increase and reliance upon electronic communications. We caution only against blind assumptions that the two forms of communications are equivalent. Despite the extensive list of benefits of electronic delivery over physical world, there are incontrovertibly still some differences between the two which dictate that the law not treat them in identical fashions.

The findings of this study by the U.S. Department of Commerce could have significant consequences on the development of the law as it attempts to establish rules for electronic delivery, similar to those for physical world delivery mechanisms.^[2] The most important consequence that could flow from the assertion that electronic delivery provides the basis to assume actual receipt is if the law treats electronic delivery the same way it treats posting through the U.S. Mail. Because of the significant differences between the electronic world -- in terms of ease of access and actual operations -- at this point in the development of electronic commerce, equivalent treatment would be very dangerous. 

II. Background on the Law's Treatment of Delivery by U.S. Post Office  

It is a well settled principle in the jurisprudence of this nation, that "proof that a letter properly directed was placed in a post office creates a presumption that it reached its destination."^[3]  This issue comes up whenever a legal right or defense was triggered by the particular notice. The courts have struggled with defining the appropriate and fair rule to apply to the situation when the recipient denies receiving a letter.^[4]   The application of this rule generally determines the  resolution of many disputes.  The extensive litigation on this issue illustrates the importance of it: the application of the presumption of receipt upon proper delivery into the U.S. Post Office dictates a certain resolution in most cases.  The issue that is important for the Department of Commerce to keep in mind while writing this report is that it is likely that this report will be used by the courts in the future when they grapple with the question of whether there should be an equivalent presumption of receipt when there has been electronic delivery. 

Under current law as applied to physical world mailing, in cases where the issue is whether the letter was received by the addressee,  it often occurs that the addressee's testimony denies the arrival and receipt.^[5]  The substantive law generally requires that a letter be mailed, and when the recipient denies receipt, the question becomes whether there was actual posting. Conversely, the question is if the addressee testifies that there was no receipt is that adequate evidence that the letter was not mailed? The answer the courts have provided uniformly is that the presumption exists that once proper mailing has been proven, receipt is presumed.^[6] 

Courts have arrived at this uniform application of this presumption based upon the reliability of the U.S. Postal Service: 

The necessity of receiving evidence of routine practice to show mailing and receipt is apparent, and the impracticality of any corroboration requirement seems equally apparent.  It is clear enough the individuals employed by a carrier, charged with the responsibility of delivering daily hundreds of messages or letters ordinarily will have no independent recollection of the delivery of any particular letter or message. It also seems clear enough that the routinized business practices of organizations such as the United States Postal Service are significantly probative on the question  of whether a message or letter, deposited  with the carrier for transmission, was delivered on a particular occasion in conformity with ordinary practice. Accordingly, the fixed methods and systematic operation of governmental postal services have long been conceded to be evidence of the due delivery to the addressee of matter placed for that purpose in the custody of the authorities. (Emphasis added).^[7] 

The reliability of the U.S. Post Office and the universal access to the U.S. mail is universally acknowledged,  but it is not appropriate to apply the same assumptions to electronic delivery.  

III. Differences Between Physical World Delivery and Electronic Delivery 

The differences between the physical world and the electronic world must be recognized. There are a number of inherent assumptions that automatically apply to a paper delivered to a person that are not necessarily applicable to an electronic record e-mailed or posted to a website addressed to a person:  

1. A piece of paper handed to or mailed to a person can be read without any special equipment.  

A computer is required to access or read an electronic record. 

2. A written record can be received by the consumer at no cost to the consumer. The consumer pays nothing to maintain and open the mailbox to which the U.S. Post delivers the mail daily.  

The electronic record can only be accessed through a computer connected to a third party for whom payment is generally required on an ongoing basis – the Internet Service Provider, or ISP.  

3. If the consumer moves, U.S. Postal mail can be easily forwarded, at no cost to the consumer and with minimal difficulty – one notice to the Post Office suffices to forward all incoming mail for a year.  

ISPs generally do not forward electronic mail. Occasionally electronic mail will bounce back as undeliverable to the sender, but this is not automatic and not universal.  

4. A paper writing mailed to a person will generally stay in the mail box or the post office until it is picked up by the recipient (or a designated agent), often for years.  

An electronic record e-mailed to a person may disappear from the ISP or the server at any time before actually being opened and read by the recipient. A electronic message posted to a website may disappear within days after it is posted.  

5. A paper writing mailed to a person can be held for receipt by an agent of the person for an indefinite amount of time without the person losing their privacy to that agent. 

To ask another person to access and retain electronic mail necessitates asking that person to open the electronic mail. It becomes impossible for electronic mail to be "held" by another, without a complete loss of privacy regarding the sender and the content of the message. 

6. Junk mail received through the post office is readily identified and easily discarded such that it does not affect the delivery of important notices and documents. 

Electronic junk mail filtering programs incorrectly filter out real message needed to be received by the recipient.

These are significant and meaningful differences between delivery of paper writings and delivery of electronic records.  But one particularly crucial difference is that it takes money and a computer to access notices delivered electronically.  To receive e-mailed messages, a person needs 

• a working computer
• connected to an ISP which is working on the day the email is delivered and working on the day the  recipient accesses the email
• which allows the recipient to receive email as addressed (not all email addresses can be accessed from all computers through all ISPs)

It does not take money to receive mail sent in the physical world. As the Department of Commerce's excellent report on the Digital Divide indicates, the majority of households are still not connected electronically.^[8]   

• The majority of Americans have no access to the Internet in their homes or elsewhere – over 55%. Only 41.5% of all households can access the Internet from their home.^[9]

• Over 8% of Americans rely on public access, their employer’s, or another person’s computer.^[10]
• The percentages of elderly and the poor who do not have access computers are much higher.^[11]

While we want to encourage and facilitate electronic commerce, we must remember that this is a majority of Americans still not connected to the Internet, at home, at work, or in a public place.  Only access at home can be considered a reliable method of receiving personal information. Use of a computer at work is frowned upon or considered grounds for disciplinary action by many employers. Public access computers have extensive waiting times and limitations on use. 

Moreover, even as Internet access continues to expand, people continue dropping their Internet service as well. The latest report on the Digital Divide indicates that each year over 4 million households have dropped their electronic access.^[12] This is a significant figure, especially when measured against the total number of households that are on line -- 43.6 million,^[13] and only a portion of these use the Internet from their homes. This is a drop off rate of over 10%.^[14]  The message here, unfortunately, is that even as more households rush to obtain Internet access, a significant number are dropping off that access.

Without question, electronic communication provides wonderful opportunities, but it cannot be assumed to be as reliable a method to receive essential information as postal delivery for the general public. A 10% drop off rate indicates that in any one year, 1 out 10 households which has Internet access the previous year will no longer be able to receive electronic communications.  

As the Department of Commerce noted, the drop off rate was higher among households at lower incomes. This should come as no surprise. Also, we can assume that households at lower incomes will continue to have less stable access to electronic commerce in the future. It is very important that the U.S. Government continue to require that access to essential information not be determined by one's wealth. Receipt of mail through the U.S. Post Office has always been free. Until electronic commerce reaches the same degree of universal access as the U.S. Postal Service does, the law should treat electronic delivery and physical world delivery of records differently. 

IV. The Department of Commerce Should Recommend That Assurances of Receipt Are Necessary for Electronic Delivery    

Assume that a financially savvy consumer shops for the best health insurance on-line. The consumer finds that the most economical product requires that all communications between the insurance company, the consumer, and the medical providers be conducted entirely electronically. So, this consumer agrees to receive notices regarding his health insurance on-line.  However, a year later, the consumer's computer breaks, and he is not in a financial position to purchase a new one.^[15] He does not have access to the Internet at work, and his obligations at work and to his family make it difficult for him to take the time it requires to go to a public access computer and wait to use the computers connected to the Internet. He also relies on his understanding that any notice of cancellation of insurance will be mailed to him.^[16]  As a result, when the insurance company decides to change its coverage policies of dependents and notifies all policy holders this consumer never gets his notice and is unknowingly left without insurance. 

Both the Federal Electronic Signature Act^[17], and the state laws on electronic records -- the Uniform Electronic Transaction Act -- fail to fully address the significant differences between the ease and lack of cost involved in receiving mail through the U.S. Postal Service, and the complexities, ongoing expense, and uncertainties involved with receiving email.  The problems experienced with e-mail are not unique to individuals. Even corporate email systems seem to break down fairly frequently.  Until email reaches at least the degree of reliability of the U.S. Postal Service, care must be taken to assure that consumers actually receive important information that is sent electronically.  

E-Sign's requirement for electronic consent provides only an imperfect protection against this danger. Requiring the consumer to go through the exercise to test his computer's capacity to access the information that will be provided henceforth electronically, at least alerts the consumer to the significance of the agreement to receive all records in the future via an electronic mechanism. A better protection against this particular danger would be statutory language as follows: 

Notices required to be provided, sent or delivered to a consumer shall be considered received only when the notice itself is opened, acknowledged, or automatically acknowledged by a flag that tells the sender it has been opened.^[18] 

The recommended language gives three ways to trigger effectiveness of a notice:  1) actual opening; 2) manual acknowledgment; or 3) a technological automatic acknowledgment received by the sender.^[19]   

E-Sign currently contains a number of important exemptions from the application of the rule that electronic records can replace paper records.^[20] Examples include notices for cancellation of utility service or insurance coverage, foreclosure or eviction, and product recall. These consumer notices are all post-transaction notices. They will all be provided at some point after the consumer has consented to receive electronic notices. When establishing this list of exclusions, Congress recognized that computers do fail and the email addresses change. The problem is that this list is not sufficiently inclusive of all the types of notices that consumers need to be sure to receive. The proposed language can actually replace the list of excluded notices because it would ensure that consumers actually receive all notices required to be provided to them. 

V.  Conclusion 

There are extensive benefits of electronic communication -- many of which provide more convenience, more flexibility, and less cost to all parties. However, these marvelous attributes do not mean that electronic communication provides the same degree of reliability and equal access that is provided by physical world delivery. We hope that the report written by the Department of Commerce recognizes the significant differences between real world communications and electronic commerce.  

It is very important that U.S. Government continue to require that access to essential information not be determined by one's wealth. Receipt of mail through the U.S. Post Office has always been free. Until electronic commerce reaches the same degree of universal access as the U.S. Postal Service does, the law should treat electronic delivery and physical world delivery of records differently.

^[1] The National Consumer Law Center  is a nonprofit organization specializing in consumer issues on behalf of low-income people.  We work with thousands of legal services, government and private attorneys, as well as community  groups and organizations, from all states who represent low-income and elderly individuals on consumer issues. As a result of our daily contact with these advocates, we have seen examples of predatory practices against low-income people in almost every state in the union.  It is from this vantage point – many years of dealing with the abusive transactions thrust upon the less sophisticated and less powerful in our communities – that we supply these comments. We publish and annually supplement twelve practice treatises which describe the law currently applicable to all types of consumer transactions. These comments are written by Margot Saunders, Managing Attorney of NCLC’s Washington office.