Electronic signatures: An introduction
In the wake of digital transformation, sending electronic documents online has become a common practice. Often, these documents require signatures as proof of the agreement. This is achieved with the help of electronic signatures. They provide an efficient way to sign documents online, reducing paperwork and enabling more streamlined transactions.
In addition to easing the process, e-signatures help protect your documents with their enhanced security and authentication techniques. They outweigh handwritten signatures in various aspects, with security being the most significant. As a result, e-signatures are gaining popularity with businesses worldwide, helping them meet their objectives efficiently.
E-signatures for U.S. businesses
The use of electronic signatures accelerated in the U.S. market in the late 1990s. This necessitated the government to make e-signatures legally binding in the country. Adoption of e-signatures increased multifold for its sheer efficiency and security that came along with them. Zoho Sign, a digital signature solution, helps businesses integrate with various applications while ensuring compliance with the nation's standards revolving around e-signatures.
As opposed to physical signatures, electronic signatures have much to offer in terms of:
- Speed
- Productivity
- Authentication
- Security
- Remote access
- Improved user experience
- Cost-effectiveness
Popular fields of use
Laws that govern e-signatures
in the U.S.
E-signatures are replacing physical signatures at a rapid pace, revolutionizing the way the world works. They are legally binding and fairly simple to use. In the U.S.,
e-signatures are considered completely legal, given that all parties involved give their full consent. The U.S. government emphasizes that a document or contract can’t be denied as evidence in a court case just because it is electronic. This page will provide a detailed view of the legal framework of electronic signatures in the United States.
The applicable laws and regulations for the use of electronic signatures in the U.S. are:
- UETA
- ESIGN Act
- HIPAA
- 21 CFR Part 11
- FERPA
Let's take a look at how these laws influence the use of e-signatures in the United States.
UETA
The Uniform Electronic Transactions Act, drafted in 1999 by the Uniform Law Commission, applies to Electronic Signatures used for transactions relating to business, commercial, and governmental affairs. UETA is a model law enacted by the U.S. federal government, and 49 states (New York being the only exception) have adopted UETA to date. UETA defines an Electronic Signature as "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."
It operates on the following fundamental principles:
- No Electronic Record or Signature can be denied validity solely because it is electronic.
- An Electronic Record or Signature satisfies the law, just as well as a physical signature.
These best practices can be followed to stay compliant. Learn how Zoho Sign helps users achieve these goals.
Clear intent:
All parties involved must show clear indication of consent by either drawing, typing, or uploading their signature so that it is legible to read and labeled clearly. These options are available in Zoho Sign for users to imprint their signature with clarity and ease.
Consent to do business electronically:
Before signing a document, the e-signature laws require the parties involved to agree to do business electronically. Zoho Sign requires signers to accept this clause before proceeding to sign: "I confirm that I have read and understood the ‘Electronic Record and Signature Disclosure’ and consent to use electronic records and signatures.”
An opt-out clause:
A signer has the liberty to opt out of signing a document electronically. In this case, the signer has to be given precise directions on manual document signing. We meet this protocol by allowing signers to simply decline or skip signing a document.
Signed copies:
All signers should receive signed copies of the document as part of the workflow for approval. This is achieved by emailing the signed copy of the completed document to the signers.
Record retention:
The parties involved reserve the right to refer to the electronic signature records in the future. Zoho Sign allows users to download the signed copy.
These are some exceptions where the UETA does not apply:
- Wills
- Codicils
- Testamentary trust
- Letters of credit
- Documents concerning title
- Negotiable instruments (such as checks)
Subject to these exclusions, Electronic Signatures shall be used in transactions where the parties have agreed to conduct such transaction by electronic means. Consent between the parties is determined by context and the parties' conduct.
ESIGN Act
The Electronic Signatures in Global and National Commerce (ESIGN) Act was passed in 2000. This federal law that legalized e-signatures in the U.S. ESIGN permits the use of electronically signed contracts as evidence in court and prevents electronic records from being denied validity in court solely because they are electronic.
The ESIGN Act does not stipulate the requirements for an Electronic Signature, but it does specify the use of Electronic Signatures as an alternative to written signatures in the following cases:
- Transactions related to interstate or foreign commerce.
- To notarize a document concerning a transaction related to interstate or foreign commerce.
- Contracts for telecommunications service.
- Letter of agency undertaken by a subscriber for change of carriers.
- Transferable records, such as a secured loan document.
Zoho Sign offers compliance with ESIGN by adhering to the following conditions:
- Displaying a clear intention to sign by the signatory.
- Attributing the electronic signature to the signer.
- Providing concrete proof of the signature being associated with the signed document.
- Maintaining the integrity of the signed document.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA), a U.S. federal law enacted in 2003, helps keep the data of patients private and secure. The U.S. Department of Health and Human Services gave its consent for an electronically signed contract/agreement to be legally recognized under a state or a federal law. However, HIPAA neither mandates nor restricts the use of Electronic Signatures in transactions involving personal healthcare information (PHI).
To bolster security in the healthcare industry, the following measures can be practiced:
- Before signing the patient form or any such document, it is crucial to conduct user authorization to prevent unauthorized users from accessing the documents with critical information.
- Non-repudiation is a major issue that surrounds E-Signatures. This can be easily tackled if appropriate audit trails are followed. With the necessary audit trails in place, no party can deny that they signed an agreement.
- Healthcare providers must comply with all applicable laws because E-Signatures are a great way to ascertain patient satisfaction and improve efficiency.
Title 21 CFR Part 11
Besides the general U.S. laws, federal and state regulations may impose additional conditions for certain industries. The Food and Drug Administration (FDA) requires Electronic Signatures to meet certain requirements, which are listed as follows:
- The signed electronic documents must contain elaborate details such as the name of the signer, date and time of execution, unique user ID, and the reason for signing.
- These details must be presented in viewable format.
- Each signature must be uniquely linked to an individual to prevent any means of tampering.
- Limiting access to authorized individuals by conducting individual verification.
- Signatories must present an additional certification testifying to the legality of the document, if requested.
- Exercise the identification code and password when biometrics are not in use and perform periodic checking.
- Employ time-stamping as an extra layer of security.
- Conduct comprehensive audit trails.
- Mitigation methods must be followed to tackle lost, stolen, or compromised tokens, cards, and other devices that contain critical information.
- Use of transaction safeguards to curb unauthorized use of passwords and identification codes and for quick and effective detection and reporting.
- Periodic testing of devices to prevent malfunction and compromise of security-critical information.
Zoho Sign offers these features when controls for life sciences are enabled:
- Customized account settings configuration
- Password-protected signatures
- Visible signatures
- Reason for signing a document
- Name of the signer, date, and time of execution
- Intricate audit trails
- Tamper-proof digital signatures with PKI standards
FERPA
The Family Education Rights and Privacy Act (FERPA) is a U.S. federal law enacted for students to protect their data records and privacy. A key aspect of FERPA-compliant release forms is the signature. Most educational institutions are resorting to Electronic Signatures because it does not require vast storage space and offers convenience in multiple aspects when compared to physical signatures.
Educational institutions covered under FERPA are required to obtain consent (with some exceptions) from the parent or student before disclosing a student's personally identifiable information from their records. This consent should be provided in the form of a signed and dated written consent as required under §99.30. FERPA allows signed and dated written consent forms to be signed using Electronic Signatures that are capable of:
- Identifying and authenticating the person providing the consent.
- Identifying approval from the person whose information is present in the consent form.
Zoho Sign focuses on the protection of educational records by using intensive authentication techniques like e-mail and SMS authentication, maintaining a detailed audit trail throughout the signing process, and employing encryption techniques that allow users to stay compliant with FERPA.
Document timestamping
A digital timestamp is a digitally signed notation that is appended to the electronic data, digital signature, or certificate that indicates that certain digital data exists at a certain point in time. This process securely binds the date and time to the document, ensuring its authenticity and integrity.
Zoho Sign partners with recognised timestamping authorities, GlobalSign and Seiko, to provide trusted digital timestamps for electronic transactions. These timestamps validate the authenticity of e-signatures and verify that the signed document existed in the given form at the time of signing and remains unaltered, adding a robust layer of security to the signing process. By making signatures tamper-proof, digital timestamps enhance the reliability of signed documents for both legal and commercial purposes.
Conclusion
Zoho Sign renders robust compliance with the stringent e-signature laws in the United States, giving users a reliable platform for electronic signatures. Zoho Sign adheres with laws such as those discussed in this article, aiding businesses and individuals in ensuring the validity and enforceability of electronic documents in the U.S. With its simple interface, enhanced security features, and intensive audit trails, Zoho Sign can be your go-to solution for meeting the requirements of present-day transactions while adhering to legal standards and regulations.
Resources
Disclaimer
The information provided in this document is for general informational purposes only and shall not be construed as legal, regulatory, or any other form of professional advice. Zoho Sign disclaims any liability for any error in the information provided herein. We recommend that you consult your legal counsel for any questions that you may have in this regard.