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#2001818 - 03/16/15 05:25 PM ESign Act - General Communication
complofcr Offline
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SE USA
Hi! We are currently not set up to deliver any statements or disclosures electronically. However, I have been told that we do have some customers that will email in to check their balance or email a transfer. Does general communication fall under the ESign Act or is it just the delivery of disclosures? Also, if someone could point me to the part of the Reg that would be great.
Thanks!

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eBanking / Technology
#2001940 - 03/16/15 10:50 PM Re: ESign Act - General Communication [Re: complofcr]
Richard Insley Offline
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Just below the title of this page, click the link (tiny print) titled "Click to Read a Reg." You will find the link to the text of the ESIGN act in the section labeled "OTHER IMPORTANT LAWS AND REGULATIONS."

If you are familiar with banking regulations, forget everything you know when you're dealing with ESIGN. It's a horse of a different color:
1. There are no ESIGN regulations. In fact, Congress prohibited ESIGN regulations by any agency.

2. ESIGN has no penalty or civil liability provisions.

3. ESIGN is entirely beneficial--it only permits things--there are no prohibitions or restrictions on any business activity.

4. ESIGN is optional. If you don't want to use e-signatures or e-documents, ESIGN is irrelevant.

5. ESIGN is universal, applying the same way to all kinds of businesses.

ESIGN only does two things:
1. Legalize electronic signatures, and
2. Legalize electronic documents as an alternative to paper documents.

ESIGN doesn't tell you what is or isn't a legitimate electronic signature. That's left to you. Any decision to use electronic signatures MUST be based on a careful risk assessment, however. Setting up some kind of a system to use e-signatures is easy. Much harder will be proving to a judge that your method is sufficiently reliable and foolproof so as to bind that customer to the terms of whatever agreement that was signed electronically.

ESIGN also doesn't tell you what is or isn't a legitimate electronic document. It's up to you to choose what works best and is well-received by your customers. Unlike the wide-open permission to use electronic signatures, you must jump through a few hoops in order to take advantage of the e-document option. These "hoops" consist of a handful of pre-consent disclosures that explain your e-document delivery system and a one-time "test drive" that will demonstrate beyond any doubt the the consenting customer has the necessary hardware, software, and savvy to receive, open, and use your e-documents.

So....with the CliffsNotes overview of ESIGN out of the way, the answer to your question becomes a bit clearer.
Originally Posted By: complofcr
Does general communication fall under the ESign Act or is it just the delivery of disclosures?

Whether or not something "falls under ESIGN" depends on you. Should you require the customer's signature (a signed receipt, for example) in connection with a general communication or document delivery, ESIGN permits you to allow the customer to sign electronically. Should you desire to send your customer any type of e-document, ESIGN permits it, BUT before you march the customer through the "informed demonstrable consent" drill, stop and decide whether that's necessary.

You hand deliver or send lots of communications to your customers. Some of these communications (including a few types of disclosures) need not be "in writing." For this group, the "ESIGN seal of approval" would be overkill. They don't have to stand up in court or pass muster with your regulator. Other types of communications must qualify as "in writing" because you may need to take them to court as evidence or produce them for regulators. Many of the disclosures required by the various consumer protection laws and regulations fall in this category. Consumer deposit account statements are included, for example, because they are the vehicle you use to deliver Reg. E and DD disclosures and these two regs require delivery "in writing." In order to switch this group from electrons to paper, you need to obtain the customer's consent to make the change. To obtain bulletproof consent, you have to follow the "informed demonstrable consent" procedure laid out in Section 7001(c)(1) of ESIGN.

Since "general communications" aren't subject to any federal laws or regulations and you won't need to produce them "in writing", there's no need to put these customers through an ESIGN opt-in.
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#2003658 - 03/24/15 05:14 PM Re: ESign Act - General Communication [Re: complofcr]
Skittles Offline
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I'm going to tag onto this if you don't mind. We're a smaller community bank (approximately $265MM in assets) and looking to start ESIGN for loan documents. If you are of similar size and use ESIGN I would appreciate a PM. I'd like to pick your brain a little.

Thanks!!!
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#2005326 - 03/31/15 06:26 PM Re: ESign Act - General Communication [Re: complofcr]
THEBANKERLADY Offline
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Same here Skittles, I need some of the same advice as well.

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#2006532 - 04/07/15 02:06 PM Re: ESign Act - General Communication [Re: complofcr]
illiniyak Offline
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Hope it's not too late to jump in on Skittles and TBL's advice seeking. We are in the same boat, if anyone that currently uses an E-Sign application would PM me.

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#2006777 - 04/08/15 03:16 PM Re: ESign Act - General Communication [Re: complofcr]
Luv2run Offline
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Let's talk about "informed, demonstrated consent" for a minute. We are looking at using an electronic delivery system for loan disclosures, that will ask for consent and go through a process to confirm the ability of the borrower to view the documents prior to allowing the customer to open the document. So my documents will be going out to the customer with the request for consent. Now, in my humble opinion, I do not think this meets the "prior confirmed consent" prior to delivery by the lender. However, I am getting beat up on this. Anyone have any thoughts on this?
Last edited by Luv2run; 04/08/15 03:26 PM.
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#2006800 - 04/08/15 03:47 PM Re: ESign Act - General Communication [Re: complofcr]
John Burnett Offline
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Consent must precede e-delivery in order for the delivery to be a valid legal substitute for the written disclosure the consumer is entitled to.
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#2006833 - 04/08/15 05:31 PM Re: ESign Act - General Communication [Re: complofcr]
Luv2run Offline
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Indeed. I am taking e-delivery in the literal sense, meaning arriving in the borrower's email, and not as to when the document is made available for viewing.
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#2006961 - 04/08/15 11:01 PM Re: ESign Act - General Communication [Re: complofcr]
Richard Insley Offline
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It may not be spelled out in just so many words, but electronic delivery in a "push" system occurs when you transmit a document through the internet (or other public delivery system.) In a "pull" system, it occurs when the document if first available for the customer to view. In both systems, delivery is not contingent on the customer actually opening a document (just like unopened U.S. mail sitting on the customer's kitchen table.)
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#2007025 - 04/09/15 02:09 PM Re: ESign Act - General Communication [Re: complofcr]
Luv2run Offline
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Thanks Richard. I was hoping you might chime in on this. Unfortunately I am not sure I am following you on this.... I am pushing the document out to a website where the borrower has to go to retrieve the document. Am I correct in thinking that "push" would be delivery and that there should be prior consent etc to that delivery?
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#2007087 - 04/09/15 03:48 PM Re: ESign Act - General Communication [Re: complofcr]
Richard Insley Offline
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Since the applicant/borrower must navigate to a web address and retrieve the documents, you have a "pull" system. "Push" systems almost alway use email as a delivery vehicle--you attach the encrypted document and push it all the way into the customer's email box. The customer goes no farther than his/her emailbox to open the e-document.

If the law or regulation (Reg. Z and RESPA, for example) requires you to deliver disclosures "in writing", then you must provide ESIGN's pre-consent disclosures and obtain demonstrable consent before you park the e-document(s) that contain the "written" TIL & RESPA disclosures.
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#2007135 - 04/09/15 05:27 PM Re: ESign Act - General Communication [Re: complofcr]
Luv2run Offline
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Thank you!
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#2008026 - 04/14/15 06:18 PM Re: ESign Act - General Communication [Re: complofcr]
INOH Offline
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I too would like information regarding Skittles and TBL's advice seeking. We are in the same boat, small bank and would like to start E-Sign.
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#2010214 - 04/24/15 06:10 PM Re: ESign Act - General Communication [Re: complofcr]
Sugar Coater Online
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Same here - we're looking at electronic loan disclosures, so I'd very much appreciate more information and advice as well!
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#2010749 - 04/28/15 05:44 PM Re: ESign Act - General Communication [Re: Richard Insley]
Dani York, CRCM Offline
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TN
Originally Posted By Richard Insley
Since the applicant/borrower must navigate to a web address and retrieve the documents, you have a "pull" system. "Push" systems almost alway use email as a delivery vehicle--you attach the encrypted document and push it all the way into the customer's email box. The customer goes no farther than his/her emailbox to open the e-document.

If the law or regulation (Reg. Z and RESPA, for example) requires you to deliver disclosures "in writing", then you must provide ESIGN's pre-consent disclosures and obtain demonstrable consent before you park the e-document(s) that contain the "written" TIL & RESPA disclosures.


We are looking at a vendor product that uses a "pull" system. The documents are uploaded to the vendors application. An email goes out and the customer clicks a link that takes them to the vendor application via web-browser. This particular vendor allows us to "order" our documents in a way that requires the customer to open document 1 (in our case the ESIGN test-drive document) and complete an action before allowing the customer to open any additional documents attached behind document 1.

This approach would allow us to send the ESIGN disclosure and obtain demonstrable consent almost simultaneously with delivering our disclosures.

Is this an acceptable approach (ordering documents so that the required disclosures can only be opened after the customer completes the demonstrable consent "test drive" has been completed)?

Or would we have to make it a 2 step process (1 email with the ESIGN disclosure and demonstrable consent piece, and a second email with the actual disclosures we want to e-deliver)?
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#2013743 - 05/13/15 02:54 PM Re: ESign Act - General Communication [Re: complofcr]
Luv2run Offline
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That is exactly how our system works. However, I took Richard's response to indicate that is not acceptable to e-sign. Since the document would be "parked" prior to consent.
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#2013814 - 05/13/15 05:09 PM Re: ESign Act - General Communication [Re: complofcr]
Richard Insley Offline
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No disclosure or other document can be "in writing" unless:
a. it's on paper, or
b. it's electronic and you have already obtained the customer's consent in the ESIGN-prescribed manner.

If a document must be "in writing" in order to be legal (periodic statements under Regs. E or Z, for example), e-delivery does not count until you've put the customer all the way through the ESIGN consent process.
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#2014693 - 05/18/15 05:50 PM Re: ESign Act - General Communication [Re: complofcr]
MonicaMc Offline
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Land of Oz
We simply have a document, with all the required verbiage, that the LOs e-mail to the borrower with a code on the bottom. The borrower must e-mail back the code to prove they were able to open and read the document. After that code is received, we are E-sign compliant and are able to e-mail loan docs to that specific e-mail address.

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#2014768 - 05/18/15 07:55 PM Re: ESign Act - General Communication [Re: complofcr]
Richard Insley Offline
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That sounds good, MM. Do you automatically copy an "ESIGN documentation retention" mailbox when your LOs send the coded "test drive" message to the borrower? How do you get a copy of the customer's email reply (containing the code) into the retention file? How long do you retain these messages? If a customer should later withdraw consent, would that message also go into the retention file.

Your bank probably uses some kind of "pull" e-delivery system for various kinds of statements & would need to do a separate ESIGN consent for that system, but it's far easier to do 2 straightforward opt-ins that to try & make one system do it all.
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#2014793 - 05/18/15 08:31 PM Re: ESign Act - General Communication [Re: complofcr]
MonicaMc Offline
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We print off a copy of the e-mail from the borrower with the code and keep it in the paper file, along with a copy of the doc that was sent to them. After closing the paper file is sent offsite, so I'm sure its kept for years and years with the rest of the file. And if they were to withdraw, we would certainly keep that e-mail as well.

And luckily, this procedure is only for the real estate lending/mortgage dept side of the bank, so the code system works well for that.

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#2014881 - 05/19/15 01:42 PM Re: ESign Act - General Communication [Re: complofcr]
RVFlyboy Offline
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You need to make sure the document you send with the code is in the same format that you are going to use to deliver the information that is required to be "in Writing". In other words, if you disclosures will be in a PDF, the code needs to be in a PDF. If the disclosures are HTML, the code needs to be in an HTML document.
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#2014885 - 05/19/15 01:47 PM Re: ESign Act - General Communication [Re: complofcr]
RVFlyboy Offline
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You need to make sure the document you send with the code is in the same format that you are going to use to deliver the information that is required to be "in Writing". In other words, if you disclosures will be in a PDF, the code needs to be in a PDF. If the disclosures are HTML, the code needs to be in an HTML document.
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#2015447 - 05/21/15 03:36 PM Re: ESign Act - General Communication [Re: complofcr]
CM-Compliance Offline
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Does each applicant need to consent to receive early residential mortgage disclosures prior to sending out the e-docs? Or does consent by one applicant equal consent by all?

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#2015994 - 05/26/15 05:12 PM Re: ESign Act - General Communication [Re: complofcr]
Andy_Z Offline
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I believe the reality is that each applicant should consent separately when each has to receive their own copy of a disclosure. I don't see how it could be justified otherwise.
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#2018390 - 06/04/15 03:44 PM Re: ESign Act - General Communication [Re: complofcr]
complyorelse Offline
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In using an online account opening system, both deposit and loan accounts, we created our esign disclosure in PDF that must be opened and then separately acknowledged. Our disclosures are provided in PDF form while they are in the online portal. Currently, all subsequent disclosures are provided in paper form, i.e. closing documents, credit score disclosure, adverse actions, etc.

My question is, if we want to incorporate more of the subsequent application notices and disclosures into the electronic delivery method, can we use the original esign consent for this purpose? The subsequent disclosures would include the credit score disclosure, appraisal, adverse action...only documents relating to a particular application, not statements and other notices once the account is booked.

The difference would be that the subsequent disclosures would be delivered via email and not the portal. It is my understanding that the demonstrated consent needs to be in the same form that the disclosures will be given. Ours would be in the same format (both PDF), but would be through a different delivery channel.

As long as the original esign consent disclosure states that an active email account is required, would we be okay? Or, should we go through an additional esign consent through the email system with the PDF attached with a code, etc.?

Thank you.

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