Topic Options
#2121130 - 03/08/17 03:22 PM E-SIGN Demonstrable Consent Before E-SIGN Consent
Getting_Grayer Offline
100 Club

Registered: 10/01/07
Posts: 180
Loc: USA
Question:

Should the customer's ability to show they can open the document in the file format provided occur before they actually consent to E-SIGN? There has been discussion that the customer can consent then show they can open the document. The regulation states there are steps to be taken prior to consent, but demonstrating they have the capability to open the document is not one of them. To me, it seems like you are putting the cart before the horse if you allow consent before the customer can demonstrate ability. Thoughts?

Top
eBanking / Technology
#2121147 - 03/08/17 04:01 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
Stripping it down to this single topic, Section 7001(c)(1) of ESIGN says:

Consent to electronic records

...if a...regulation...requires that information...be provided...to a consumer in writing, the use of an electronic record...satisfies the requirement...if—
...
(C) the consumer...consents electronically...in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent....


Notice that ESIGN doesn't spell out an exact sequence of events, but rather envisions that consent and the demonstration happen during the same session. The one important exception permits consent by non-electronic means PROVIDED the consumer subsequently confirms his/her consent electronically in a manner that reasonably demonstrates....
_________________________
...gone fishing.

Top
#2130531 - 05/15/17 05:21 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Timeline Offline
100 Club

Registered: 12/21/11
Posts: 103
I would like to revisit this question. How do others do the non-electronic means providing for the consumer to confirm their consent electronically in a manner that reasonably demonstrates...? What does that look like at your institution?

Top
#2174394 - 04/20/18 06:42 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
GilaMonster Offline
Gold Star

Registered: 09/15/15
Posts: 404
Loc:
Timeline, our consent is provided electronically, I don't know how else it can be compliant for ESIGN if it "non-electronic". New question though - If we have applicants consent to ESIGN within our LOS's 'esign portal' of sorts, can we send documents via regular email and consider them delivered as long as they are in the same format (PDF) that the applicant consented to?

Top
#2174403 - 04/20/18 08:11 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 67324
Loc: Galveston, TX
What does your E-Sign agreement say regarding how the delivery of documents will occur? Plus what do you mean by regular e-mail - an unencrypted e-mail system?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Top
#2174409 - 04/20/18 08:55 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
GilaMonster Offline
Gold Star

Registered: 09/15/15
Posts: 404
Loc:
Currently the disclosure is too restrictive, but if we were to change it... I'm trying to figure out exactly what "can access information in the electronic form that will be used" drills down to. Curious if it means the full process (like the 'esign portal' through our LOS), or document format, like PDF.

By regular email I mean like outlook, but we have encryption abilities.

Top
#2174443 - 04/20/18 10:56 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: GilaMonster]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
Originally Posted By GilaMonster
what "can access information in the electronic form that will be used" drills down to.
Since ESIGN doesn't permit rulewriting, there are no commentaries or interpretations to help answer questions like this. Litigation would provide case law, but since enactment in 2000, federal judges haven't had many chances to declare exactly what Section 7001 means or doesn't mean. That leaves it up to each institution to interpret ESIGN. For my money, the demonstration (test drive) should match the actual e-delivery process exactly. If you're pushing e-documents with email, then that's how your test drive should work. If you're using some combination of push/pull, then all combinations should be included in the test drive.
_________________________
...gone fishing.

Top
#2174444 - 04/20/18 10:57 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Andy Z Offline


10K Club

Registered: 10/27/00
Posts: 26472
Loc: On the Net
"can we send documents via regular email and consider them delivered as long as they are in the same format (PDF) that the applicant consented to?"

So long as you're following the described and tested method you would be compliant. And encrypted is always best. But I must ask when you say "consider them delivered" do you mean at that moment, or within guidelines of a requirement such as it is considered delivered after 3 days or immediately if acknowledged by the recipient?
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Top
#2174563 - 04/23/18 07:08 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
GilaMonster Offline
Gold Star

Registered: 09/15/15
Posts: 404
Loc:
Thanks guys! Not sure why we would want to work outside of our vendor's portal but just making sure I can defend our position, if it comes to it. Andy, I meant after three days of being emailed we could consider them delivered. As always, appreciate the help!

Top
#2174623 - 04/23/18 11:50 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
Keep in mind that delivery and receipt are not necessarily one and the same event. Dropping a paper document in the U.S. mail is "delivery." With proper ESIGN consent, transmitting an electronic document would also be "delivery." For an assortment of well-known reasons, the consumer may not actually "receive" (and acknowledge receipt) your documents for a number of hours, days, or possibly ever. Until recent amendments to TIL, "delivery" was the only standard we had to meet. Receipts were nice...but all of the regs considered them optional.
_________________________
...gone fishing.

Top
#2174637 - 04/23/18 12:14 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
GilaMonster Offline
Gold Star

Registered: 09/15/15
Posts: 404
Loc:
Good point, Richard - I meant "received" based on the documents/regulation I'm referring to but didn't phrase it correctly.

Top
#2175057 - 04/25/18 09:57 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
BAY Offline
100 Club

Registered: 01/25/06
Posts: 137
Another question tied to E-Sign. If our current On-Line Banking Agreement (and E-Sign) indicates that we will provide deposit related notices electronically; but now we would like to add loan notices - must the customer re-consent to the Change in Terms indicating that they agree to receive loan notices (assume demonstrable consent is not an issue because the loan notices will be sent in the same format).
Or can the Bank provide an electronic Change in Terms Notice regarding our Online Banking Agreement adding loan documents to the types of documents that we will provide. Would a Change in Terms Notice be sufficient without the need to re-consent.

Top
#2175064 - 04/25/18 10:37 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Adam Witmer Offline
Diamond Poster

Registered: 09/21/10
Posts: 1033
(B) the consumer, prior to consenting, is provided with a clear and conspicuous statement—
(ii) informing the consumer of whether the consent applies (I) only to the particular transaction which gave rise to the obligation to provide the record, or (II) to identified categories of records that may be provided or made available during the course of the parties’ relationship
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Top
#2175079 - 04/25/18 10:54 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
John Burnett Offline

10K Club

Registered: 10/27/00
Posts: 37043
Loc: Cape Cod
Before you invest a lot of effort in getting an additional demonstrable consent for the loan notices, take a step back and imagine the other types of disclosures or notices that must be in written form but you may -- at some point -- want to send electronically using the same channel you're currently using for electronic notices/disclosures. Expand the scope of your E-Sign disclosure/solicitation to include them (see Adam's post just above and the portion of the law's text after (II)).
_________________________
John S. Burnett
BankersOnline.com
Professional Compliance Nerd since 1976
Bankers' Threads User #8

Top
#2175089 - 04/25/18 11:07 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
BAY Offline
100 Club

Registered: 01/25/06
Posts: 137
That is exactly what we are doing.....we are expanding the E-Sign disclosure to include almost all notices....but the question came up....if we expand the scope of notices.....can we simply provide a Change in Terms to the Online Banking Agreement or do we have to have our customers re-affirm their consent.

Top
#2175100 - 04/25/18 11:22 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 67324
Loc: Galveston, TX
Adam gave you the citation. You need a re-consent to the new agreement.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Top
#2175123 - 04/25/18 11:52 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: BAY]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
Originally Posted By BAY
can we simply provide a Change in Terms
Notification (cram-down) expresses the bank's consent, not the customer's. Although you only need to obtain consent once for these additional "categories of records", all future loan notices or disclosures only count as "written" when there has been a valid consent. Think this through carefully--the risk of underdoing ESIGN consent is systemic.

Your next question will very likely be "must we refrain from using paper documents after obtaining consent for tree-free delivery?"

Unlike a revolving door where one side must be closed when the other is open, I don't see why you can't use both delivery methods interchangeably. My only concerns are customer confusion (and ensuing complaints) and a regulator's knee-jerk UDAAP reaction to disclosure delivery habits that might cause consumers to overlook notices/disclosures arriving via an unexpected channel. Thoughtful wording of your new & improved consent language allows you to inform customers that there may be instances when you will use the non-preferred delivery method.

Looking at the reg that required the notices/disclosures (Z, for example), you won't find any requirement to be consistent with your delivery methods. These regs tell you that the notices/disclosures must be delivered "in writing" and that ESIGN-enabled e-documents count as "written." They DON'T say that paper ceases to be "in writing" if you also obtain consent for e-delivery.
_________________________
...gone fishing.

Top
#2186174 - 07/19/18 05:10 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
stephp Offline
New Poster

Registered: 01/09/15
Posts: 12
Loc: SC
We have recently added online loan consumer loan applications and have an at application disclosure that we would like to deliver at the time the customer completes the application. Recently, in a compliance school, one of the educators mentioned that a regulator stated in an article that if a consumer can access the online application, print the disclosure and indicate they received the disclosure that the complete e-sign process may not be necessary since they proactively retrieved this information themselves.

Has anyone else seen or heard anything on this topic?

Top
#2186203 - 07/20/18 07:54 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: stephp]
Adam Witmer Offline
Diamond Poster

Registered: 09/21/10
Posts: 1033
This is a difficult question to answer because we don't really know what they meant by (or what exactly happens when they) "access the online application, print the disclosure and indicate they received the disclosure."

Originally Posted By stephp
that the complete e-sign process may not be necessary...

My thought is that this statement is wrong, as ESIGN is required and I've never heard of a "partial" ESIGN. What the regulator could have been saying is that the described process may have already complied with ESIGN and no further ESIGN action is needed. The bottom line is that ESIGN is required but there are multiple ways to comply.

The rule (law) from ESIGN is fairly short and doesn't give specifics of what exactly is or is not acceptable for affirmative consent:

(c) Consumer disclosures
(1) Consent to electronic recordsNotwithstanding subsection (a), if a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if—
(A) the consumer has affirmatively consented to such use and has not withdrawn such consent;
(B) the consumer, prior to consenting, is provided with a clear and conspicuous statement—
(i) informing the consumer of (I) any right or option of the consumer to have the record provided or made available on paper or in nonelectronic form, and (II) the right of the consumer to withdraw the consent to have the record provided or made available in an electronic form and of any conditions, consequences (which may include termination of the parties’ relationship), or fees in the event of such withdrawal;
(ii) informing the consumer of whether the consent applies (I) only to the particular transaction which gave rise to the obligation to provide the record, or (II) to identified categories of records that may be provided or made available during the course of the parties’ relationship;
(iii) describing the procedures the consumer must use to withdraw consent as provided in clause (i) and to update information needed to contact the consumer electronically; and
(iv) informing the consumer (I) how, after the consent, the consumer may, upon request, obtain a paper copy of an electronic record, and (II) whether any fee will be charged for such copy.


In their exam procedures, the FDIC provides a bit of further guidance by saying that affirmative consent should be performed "in a manner that reasonably demonstrates the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent." The FDIC exam procedures can be found here: https://www.fdic.gov/regulations/compliance/manual/10/x-3.1.pdf
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Top
#2186253 - 07/20/18 11:30 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Adam Witmer]
stephp Offline
New Poster

Registered: 01/09/15
Posts: 12
Loc: SC
Thanks for the info. I will re-read the guidance again and see what we can do to increase the e-sign section of the application.

Top
#2186337 - 07/20/18 04:05 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Andy Z Offline


10K Club

Registered: 10/27/00
Posts: 26472
Loc: On the Net
I can see making forms available for download, to be printed and mailed or otherwise delivered in paper form to avoid E-SIGN. This would be similar to what the bank would snail ail upon request but no application was taken yet. But I also have no idea what partial E-SIGN compliance is.

Regulators have not done much with E-SIGN in either guidance or known enforcement actions. There are court cases that assist, only a handful that include banks but only one agency action I recall mentioned E-SIGN. Without clarification, I'd keep a conservative approach.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Top
#2186362 - 07/20/18 05:37 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: stephp]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
Originally Posted By stephp
We have recently added online loan consumer loan applications and have an at application disclosure that we would like to deliver at the time the customer completes the application. Recently, in a compliance school, one of the educators mentioned that a regulator stated in an article that if a consumer can access the online application, print the disclosure and indicate they received the disclosure that the complete e-sign process may not be necessary since they proactively retrieved this information themselves.

Has anyone else seen or heard anything on this topic?

There's a great deal we don't know, including:
- Is the online application interactive? ("submit" button at the end)
- what loan products are eligible for online application?
- what's in the "application disclosure"?
- what law/regulation requires you to deliver some or all of the "application disclosure" in writing?
- regulator from which agency?
- where was the article published?
- how can an applicant "proactively" retrieve a document that the lender is required to deliver in writing?

Allowing customers to pick up a handful of assorted paper disclosures on the way out the door has never satisfied "delivery in writing" requirements in my way of thinking--and the opinion attributed to a regulator (who has no authority to interpret ESIGN) sounds like the electronic equivalent.
_________________________
...gone fishing.

Top
#2186716 - 07/25/18 09:53 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Richard Insley]
stephp Offline
New Poster

Registered: 01/09/15
Posts: 12
Loc: SC
They do have to select to view/print the disclosure or they will not be able to submit the application. The software tracks the date and time they viewed or printed the disclosure so we can verify delivery. Also there is a submit button at the end of the application process.

We are going to add more e-sign language to the application screen just to be safe.

Top
#2186720 - 07/25/18 10:06 AM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 67324
Loc: Galveston, TX
How can you tell that they successfully viewed the documents?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Top
#2186776 - 07/25/18 01:18 PM Re: E-SIGN Demonstrable Consent Before E-SIGN Consent [Re: Getting_Grayer]
Richard Insley Offline
Power Poster

Registered: 10/26/00
Posts: 9175
Loc: Toano, VA
ESIGN requires you to verify delivery only once--using some type of test document. It's like a license. You and the customer march through the "informed demonstrable consent" handshake once to get started. Then, the documents that flow through that channel from you to the consumer will satisfy the "must be delivered in writing" part of any of the disclosure requirements of Reg. Z, RESPA, and any other federal consumer protection law/regulation. Any additional requirement that you must confirm receipt of an e-document comes from somewhere other than ESIGN.

If, in fact, you are dealing with two requirements, not one, then you must address each separately. First, an e-document doesn't count as a written disclosure at all unless you first obtain consent in the ESIGN-prescribed manner. When you have determined that your ESIGN handshake is valid, then you're in position to comply with Reg Z's or RESPA's (etc.) general delivery requirement that used to be limited to paper.

In order to understand why delivery isn't the same thing as receipt, think what happens to disclosures sent via USPS. The envelope is "delivered" when you hand it to a postal employee because federal law assumes that everything accepted by the USPS will be delivered to the addressee. When Congress enacted ESIGN, it created a new version of this "mailbox rule." Whether the addressee opens the envelope (paper or electronic) and reads the payload document is a different matter. Confirmation of receipt will require something more than a one-time ESIGN consent.
_________________________
...gone fishing.

Top

Moderator:  Andy Z