Re: HR 1714 ‑
The Electronic Signatures in Global and National Commerce Act
Dear Member of the
House of Representatives
The undersigned consumer and privacy advocates, consumer lawyers and
law professors write to ask your help in addressing the problems in H.R. 1714.
This bill goes much too far, too fast. In its current form, this bill undercuts
important consumer protections in state and federal law, as well as interferes
with a state's rights to protect its own consumers.H.R. 1714 must be amended to address essential consumer
protection issues, or to apply only to non-consumer transactions. Encouraging electronic commerce and
protecting consumers need not be competing goals.
The bill authorizes businesses to
replace paper records, such as warranties, contracts, and notices, with
electronic records regardless of whether the transaction is conducted online or
offline and regardless of whether the consumer has the equipment and ability to
access information electronically. Paper disclosures required by law are
designed to serve consumers' interests by providing them with information
critical to making informed choices in the marketplace, understanding their
rights and obligations during commercial transactions, and enforcing their
rights when transactions go sour. Consumers can potentially benefit from
receiving information electronically.However, the broad‑brush approach of H.R. 1714 will sacrifice
important standards and nuances in state and federal consumer law, and erode
consumer trust and confidence in electronic commerce.
The bill fails to require the following reasonable elements:
*The consumer
actually consents to receive electronic records (instead of being required to
consent as a condition of entering into the transaction);
*The consumer
actually has a computer to access the electronic records;
*The consumer's
computer actually has the technological capacity to receive, retain and print
the electronic records;
*The electronic
records be provided in a "locked" format which allows the electronic
records to be produced to a court at a later date in a manner which can be used
to prove the contents and the date the record was received;
*The consumer is
able to receive paper copies of electronic records in situations where the
consumer was unable to access or retain the electronic record.
Electronic signatures are provided the same legal status as handwritten
signatures without any consumer protections. Although the bill would give equal
weight to an electronic signature as it would to a handwritten signature, there
are no requirements that:
*Electronic
signatures meet certain standards to provide all parties with assurances
against forgery;
*The
authentication technology actually certifies the necessary information about
the parties;
*The
technologies are accessible equally to both parties in the transaction;
*The
technologies provide consumers with protection from loss if there is a
technology failure.
Consumers can potentially benefit from receiving information
electronically.However, the broad‑brush
approach of H.R. 1714 will sacrifice important standards and nuances in state
and federal consumer law.This bill
would eviscerate important consumer protections in state and federal law, as
well as interfere with a state's rights to protect its own consumers without
imposing any protections against misuse, mistake, or fraud.
S.761 would preempt every state
and federal law that requires a paper writing to be provided to a consumer. In each case, an electronic record could be
provided instead.State requirements
that certain information be given to consumers in writing often are adopted
because of a history and pattern of harm to their citizens. Required paper
notices and documents are critically important to ensure that consumers are
apprized of their rights and obligations. Replacing these essential paper notices
and contracts with electronic records should not be done without adequate
assurances that consumers will be able to receive and retain electronic
information.These state and federal
laws should not be lightly swept away.
The bill would allow businesses to provide essential consumer
information exclusively online‑regardless of whether the transaction
occurs on or off line. Nearly
two thirds of the American public, and an even larger percentage of low income
and minority citizens, do not have access to the Internet. This bill would
limit, or eliminate, their access to information deemed critical to a
functioning marketplace under state and federal law.
H.R. 1714 would permit electronic disclosures to substitute for paper
notices even when the consumer doesn't know that he or she has consented to
electronic communication, doesn't have a computer, or can't print the
information when it is received. There are no requirements in the bill for meaningful, actual agreement
by the consumer to receive records electronically. In almost every transaction
between consumers and business it is a "take it or leave it"
proposition for the consumer. Nothing in the bill regarding the intent of the
parties (Sec. 6(c)) would prevent consumers from being required to accept
electronic records instead of paper writings. One can easily imagine computer
kiosks on businesses' premises at which consumers would be required to
electronically consent to receiving electronic records, as a condition of doing
business.
The bill expects that consumers entering into a transaction: a)
understand the importance of disclosures and information not yet received; b)
understand the technology and capability of a computer to receive, retain and
print information before it is received; and, c) assess whether the technology
and capacity to receive, retain and print the information will be available at
uncertain dates in the future. In many transactions there are ongoing
requirements for paper correspondence, including statements of accounts, notices
of default, information on escrow accounts, change in mortgage services. Under
H.R. 1714 the business will not be required to provide paper copies. Crucial
information about the consumer's rights and obligations will not be received.
To provide reliable documentation of transactions, information provided
electronically must be tamper proof. Documents provide certainty to
transacting parties, capturing the terms of the agreement.Courts and others who are later called upon
to interpret and enforce agreements rely on paper records to construct the
parties' intent.For electronic
information to provide the same certainty to the parties and the courts they
must be protected from both inadvertent and intentional changes.If a consumer inadvertently changes a single
byte on an electronic document, or an electronically provided notice is deleted
during a business' overhaul of their Web site, the documents will be
unavailable or useless if disputes arise.
The bill directs courts to give electronic signatures the same weight
as their handwritten counterparts without addressing the heightened risks of
forgery, duplication, and identity theft evident in today's online marketplace. The bill inappropriately allows businesses
to make complicated technology choices and put the risks on consumers.
Businesses have access to information about electronic commerce‑enabling
technology and the ability to limit, and plan for, the risks created by
electronic commerce.Consumers have
neither the access to information nor the expertise necessary to evaluate the
appropriateness of a given technology.Permitting risk shifting to consumers in this situation is bad policy.
To ensure that a robust infrastructure for electronic commerce emerges
Congress should place the responsibility and liability for technology failures
squarely on the shoulders of certificate authorities, manufacturers, or the
businesses dictating the technology to be used. The bill permits "the parties to a
transaction to determine the appropriate authentication technologies and
implementation models for their transactions . . .." When the two parties
to a transaction are a consumer and a large business the gross inequality of
bargaining power will lead to businesses dictating the authentication
technology and requiring the consumer to bear the risk. The security of online
interactions is critical to both businesses and consumers.
Dishonest businesses could require or permit a form of authentication
to be used that is corruptible or unreliable. The use of weak authentication tools may
place the consumer in a worse position than the absence of authentication. In
the consumer context, the risk of misunderstanding any risk‑shifting
consequences for adopting an authentication procedure are even greater than in
the business to business context since such a rule is directly contrary to the
rules that now apply in other similar consumer transactions. As a result, a law
that peremptorily establishes the legality of any authentication technology
agreed to must ensure that consumers are not bound by the unauthorized use of
an online authentication procedure.Unless fraud and error losses associated with online transaction
technologies are allocated to technology providers and online vendors, there
will be no incentive for investment in the further improvement of the
technologies in use.Liability
standards must be clearly established in the law.
Electronic commerce requires the development of reliable methods of
verifying the identity and capacity of contracting parties.We look forward to a robust online
marketplace built upon strong security protections for the individual's
identity, personal information, commercial transactions and
communications.However, at this time
such a framework does not exist.Requiring courts to give the same weight to electronic signatures
without assessing the different risks posed by online commerce may
unintentionally harm consumers.
Congress should not pick technology winners and losers.This bill poses a threat to technical
advancement.By blessing the use of
unproven--many believe insecure -‑ technical applications, Congress
may unintentionally harm consumers and retard the development of truly robust
technical tools for electronic commerce.
Consumers will welcome the opportunity to engage in safe and secure
online transactions.However, safety
and security are built upon our long history of providing strong consumer
protections.Consumer protections
equivalent to those found in the offline world must be built into the online
marketplace.This bill should be
amended to address the consumer protection concerns identified above, or should
exempt all consumer transactions. We look forward to working with you to ensure
that consumer protections are a vital part of the online marketplace.
For specific questions, please contact Margot Saunders ofthe National Consumer Law Center, (202)
986-6060, orFrank Torres, of Consumers
Union, (202) 462-6262.
Sincerely,
Law Professors
& Experts:
Jean Braucher
Roger Henderson
Professor of Law
University of
Arizona
Jim Brown
Director, Center for
Consumer Affairs
University of
Wisconsin at Milwaukee
Mark Budnitz
Professor of Law
Georgia State
University College of Law
Donald Clifford
Aubrey Brooks
Professor of Law
University of North
Carolina School of Law
Elizabeth Warren
Professor of Law
Harvard University
School of Law
Judith Fox
Legal Clinic
University of Notre
Dame law School
Michael M.
Greenfield
Walter D. Coles
Professor of Law
Washington
University
Thomas Shaffer
Robert & Marion
Short Professor Emeritus of Law
University of Notre
Dame Law School
Norman I. Silber
Professor of Law
Hofstra University
Jane Kaufman Winn
Associate Professor
Southern Methodist University School of Law
William J. Woodward, Jr.
Professor of Law
Beasely School of Law
Temple University
Sister Deborah Cerullo, SSND
Notre Dame Legal Aid Clinic
Cem Kaner, J.D., Ph.D.
Attorney at Law; Software Development Author / Consultant
National Advocacy Organizations:
Alan Reuther
United Auto Workers
Ken McEldowney
Consmer Action
Gail Hillebrand & Frank Torres
Consumers Union
Jean Ann Fox
Consumer Federation of America
Dory Rand
National Center on Poverty Law
Margot Saunders
National Consumer Law Center
Donald Saunders
National Legal Aid and Defender Association
Kathleen Boundy &Paul Weckstein
Center for Law & Education
Larry Lavin
National Health Law Program
Jim Williams
National Employment Law Project
Kevin Dillard
Organization for a New Equality
Roger Rosenthal
Migrant Legal Action Program
Burton Fretz
National Senior Citizens Law Center
Wendy Weinberg
National Association of Consumer Agency Administrators
and NCLC