Electronic Signatures: A Good Idea?

Electronic signatures became legally binding with the passage of the Electronic Signatures in Global Commerce Act on October 1, 2000. Many companies, both Internet based and brick and mortar, are now capturing signatures electronically to reduce the amount of paper that must be stored, as well as to a convenient, searchable method of retrieving the signature, should it ever be needed. The ability to capture electronic signatures, verify identities, and maintain security is important in order to allow businesses to compete on the Internet. Some businesses use electronic signature collection as a method of meeting legal requirements.

There are several forms of electronic signatures, including pin numbers, passwords, biometrics, digitized signatures and digital signatures. Delivery services such as UPS and FedEX use digital signature pads to capture customer signatures. The Electonic Signatures inGlobal Commerce Act makes completion of contracts much quicker, since it is no longer necessary to mail documents and wait for them to be returned signed.

There are, however, some privacy concerns. This makes a great deal of sense in a world where electronic identity theft is already a reality. With the advent of the electronic signature, and other biometric devices, it is possible that identity theft will be more difficult, not easier. In the future, customer signatures captured by credit card companies could be the basis for denying sales when the signature doesn’t match the one in electronic storage. If some mechanism were devised and put in place to prevent thieves from updating a signature by erasing the valid signature and replacing it with an invalid one, this would make using credit cards safer.

Electronic signatures on file at a favorite shopping place could be just the beginning. According to Bill Allen, e-marketing manager for the Texas Instruments RFID group, "You can have, for example, a card similar to a credit card with an RFID tag . . .That card could identify the customer, and, by reading it, a salesperson would be able to know that the customer wears a size 8 and prefers particular colors and designers." The combination of signatures on file and information about the customer, which might include home address, credit card numbers and more, will make the shopping experience of the future quite different from today.

The RFID tag on the credit card could even be charged as we walked out the door with our merchandise, since the signature is already on file in the retailer’s computer. Then it will be more important than ever for customers to keep up with the credit card their wallets. With an electronic signature on file, a pickpocket could walk out of the store with the wallet containing the RFID credit card and several hundred dollars worth of merchandise. There is more at stake than just the privacy issues involved. It could easily become an issue of stolen identity, with the losses incurred by the RFID card holder limited only by the credit limit on the card. According to Mark Timmis, the FDA has issued rules of guidance requiring all electronic records and signatures to follow particular structures to help eliminate some of the security issues. However, until law makers address the liability of the victims of such crimes, customers are not likely to be comfortable with the technology.

Photo Credit: Three Business Men by Kosta Kostov

 Resources:

Nunno. Richard M. (2000). Electronic Signatures:  Technology developments and legislative issues. Government Information Quarterly. 

WEBONLY.  (Oct. 2000). With advent of e-signatures, no ink necessary.  Spectrum Online. 

Hill, Kimberly.  (April 24, 2002).  Prada Uses Smart Tags to Personalize Shopping.  CRMDaily.com.