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#2249610 - 02/23/21 06:56 PM E-Sign Disclosure Question
Bankwoman1 Offline
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This may be a silly question, but I'm going to ask anyway...

Is it ok for a FI to have more than one e-sign disclosure? For example: we currently have an e-sign disclosure that is directed more to our customers who are signing up for eStatements. We are now in the process of setting up online account opening and was wondering if we needed to update the disclosure we currently have or could we create a new disclosure directed towards our online account opening process only?

Thanks! I feel like I'm full of questions today!

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eBanking / Technology
#2249612 - 02/23/21 07:18 PM Re: E-Sign Disclosure Question Bankwoman1
BrianC Offline
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Since the disclosure is specific to the types of documents / statements for which the customer is consenting and different platforms within the bank may have different hardware / software requirements, there could be several variants of the disclosure depending on the product or service to which it applies.
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#2249614 - 02/23/21 07:23 PM Re: E-Sign Disclosure Question Bankwoman1
Bankwoman1 Offline
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Thank you Brian! I have been going back and forth on this for a while now and it's been giving me a headache! Thinking we were going to need to update the one we currently have and how to make it work for both services. Then thinking we would need to provide the updated copies to existing customers since it had been updated.... I kept thinking multiple agreements had to be the answer! smile

As always....I really appreciate your help! Thank you!

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#2249646 - 02/24/21 02:04 AM Re: E-Sign Disclosure Question Bankwoman1
Richard Insley Online
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The way you presented this question gave me concern. It seemed too casual...but I couldn't put my finger on a particular reason for my unease. Then I re-read Section 7001(c) and realized that the only time the word "disclosure" (or any form of the word "disclose") is used is in the title to that section.

Since inception, bankers have tried to understand and implement ESIGN like a banking regulation...which it is not. In our familiar world of "truth, fairness, and equality" regulations, a "disclosure" highlights, restates, or explains certain elements of a note, service agreement, account agreement, or some other form of legal contract.

When it comes to ESIGN, the "disclosure" IS the service agreement (contract.) Sure, we might write all of the ESIGN-required information into a paragraph and call it a "disclosure," but it actually boils down to a service agreement.

You offered a set of terms and your customer consented--just like signing a note or account agreement. If you follow the terms (to which you and the customer both consented) to a "T", then every e-document you deliver will be the legal equivalent of a "written" document. Failing to provide electronic communications in exactly the manner "disclosed" would be sufficient reason for a court to declare your "ESIGN license" void and all of the e-documents NOT to be "in writing." The exposure, of course, would come from the laws that required those "written" disclosures (initial and periodic) about the products.

The reason for my concern is that I can't imagine a universal service agreement that would work for all types of loans, deposits, and other banking services. Likewise, a universal service agreement for two or more methods of electronic communication would, at best, be awkward and could introduce uncertainty. For the same reason you use multiple service agreements for the products, you're wise to do the same for the e-communication services.
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#2249650 - 02/24/21 01:24 PM Re: E-Sign Disclosure Question Richard Insley
Bankwoman1 Offline
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Thank you Richard for the information. I have to admit.....ESIGN is one of the hardest things in compliance for me to wrap my head around. And I don't know why. So I totally understand what you are saying. When it comes to ESIGN, every electronic service will need an "agreement" as it would be very difficult to put everything in one single agreement. And each service is different.

So, with that said, can I ask you this. With our online account opening process, we will be using a vendor to send documents to the customer for an electronic signature. This vendor has provided us with a sample agreement that we can modify to fit our needs. From my understanding, the customer will need to agree to this agreement when they receive the email containing the account documents needing signed. I am thinking we will also need an ESIGN agreement located on our online account opening website that the customer will agree to prior to starting the account opening process, because within this site they will receive required disclosures and the disclosures will also be emailed to them through the online account opening website once they have finished the process. Am I thinking this thru correctly? An agreement at the beginning of the account opening process and also an agreement attached to the email containing the documents needing signed? Or do we just need one agreement at the beginning of the process that covers the whole online account opening process?

I'm sorry if I am making this harder than it really is.....

Thanks!

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#2249664 - 02/24/21 03:46 PM Re: E-Sign Disclosure Question Bankwoman1
Richard Insley Online
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Stop thinking about ESIGN as if it's a regulation. Instead, compare it with obtaining a license--your driver's license is a good example. With it, you can operate a vehicle on the public highways. Without one, you have to get there by more primitive means (on foot, horse, bicycle, etc.) Getting a driver's license is a 2-part process. First you receive, study, and pass a test on the rules of the highway. Then, you have to take a test drive and prove to the officer that you can operate the vehicle safely and in compliance with the rules of the road. With ESIGN, there are many similarities. The pre-consent "disclosures" are like the driver's manual--you're expected to know everything in it, and in the license application you signed (contract), you promised to operate in accordance with those rules. ESIGN's demonstration is exactly like your test drive. One time, only, your customer must prove that s/he can do the things that the ESIGN "license" will permit you to do from then on.

All your ESIGN "license" gets you is the legal right to do one thing--substitute electronic documents for paper documents with the assurance that state and federal courts will recognize your e-documents as the exact equivalent of a paper document. Now, you have to break down the account opening process and determine (1) where it's necessary to use "written" documents, and (2) what parts of those documents require the customer's signature in order to stand up in court.

Every service agreement is a contract, and the validity of all contracts is a matter of state law. Counsel (yours or the vendor's) will have to advise you what a court in your state will demand before issuing judgements to enforce the terms of each contract. If these demands include "written" contract documents, then you have two choices: paper or UETA/ESIGN-enabled electronic documents. Before accepting your electronic "written" contract documents, the court will require you to prove that you followed the necessary steps to obtain that "license" to substitute electrons for paper contract documents. UETAs require a simple agreement between the parties. ESIGN adds the "test drive." Regardless of which law you use as legal justification for the substitution, that e-document substitution agreement (consent) must be in place before the contract document is delivered. From that point on, you have to determine what contract and disclosure documents you must deliver in order to open the new account and, most importantly, which ones of those documents must be "in writing."

All Reg. E disclosures, for example, must be "in writing." That includes both the initial Reg. E disclosures and the periodic disclosures (statements.)

Prior to delivering the first of each type of document electronically, you must have valid consent. All federal disclosures require ESIGN-style consent (including a "test drive".) Documents subject to state laws (contracts, state disclosures, etc.) can be handled under either ESIGN or your state's UETA. If the delivery mechanism involves different systems to get the documents from you to the consumer, than you probably want a separate consent that is specific to the way each platform works.

"Online account opening" may look like a single process, but to figure out the need for e-delivery agreements and consent, you have to break the account opening down to its component parts and decide whether you need consent on a part-by-part basis. After figuring out the pieces, then you can combine the separate disclosures/consents into the fewest number of e-delivery agreements and design the workflow so consent always precedes e-delivery of the first "payload" e-document.
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#2249681 - 02/24/21 05:11 PM Re: E-Sign Disclosure Question Bankwoman1
scb2011 Offline
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TN
Is it sufficient, in an E-Sign Agreement / Consent, regarding disclosing how a customer can stop electronic delivery and obtain paper copies, can we just say to contact your customer service representative, or visit a branch instead of providing a phone number? Does that comply?

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#2249693 - 02/24/21 06:26 PM Re: E-Sign Disclosure Question Richard Insley
Bankwoman1 Offline
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Midwest
Thank you Richard! Your explanation really does help me understand ESIGN much better!

I appreciate all of your help!! I will try not to have any more questions.......but I make no promises! wink

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#2249703 - 02/24/21 07:01 PM Re: E-Sign Disclosure Question Bankwoman1
John Burnett Offline
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Wisdom without questions never grows,
Last edited by John Burnett; 02/24/21 07:01 PM.
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#2249729 - 02/24/21 09:17 PM Re: E-Sign Disclosure Question Bankwoman1
Bankwoman1 Offline
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Midwest
Thanks John! I always have to tell myself, when I question (haha) whether to ask a question or not, that there are no stupid questions!! LOL

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#2249757 - 02/25/21 02:36 PM Re: E-Sign Disclosure Question scb2011
Richard Insley Online
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Richard Insley
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Originally Posted by scb2011
Does that comply?
ESIGN does not permit implementing regulations, commentaries, or other official issuances, so "compliance" isn't the primary concern. Rather, what matters is "does it work?" If you have any doubt that your branch staff would know how to handle a customer request to change document delivery methods or obtain paper copies of e-delivered documents, then add something into your procedures and training.
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