Skip to content
BOL Conferences
Thread Options
#2266513 - 02/17/22 03:51 PM ESIGN & Online Banking Enrollment
Bankwoman1 Offline
Diamond Poster
Joined: Dec 2015
Posts: 1,046
Midwest
This may be a stupid question, but here goes:

Can we require customers to agree to an ESIGN agreement during their online banking enrollment process? I guess my thought is, they have to agree to the T&C's when signing up for online banking, and those are not provided in paper form. If we also have an ESIGN agreement during this process, can we make this a requirement for being approved for online banking? Or would it just slow down the process of approving them, because disclosures would have to be mailed and signed off on....correct?

Am I overthinking this and driving myself crazy or is this a legit question?

Return to Top
eBanking / Technology
#2266539 - 02/17/22 06:40 PM Re: ESIGN & Online Banking Enrollment Bankwoman1
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
You cannot require a consumer to agree to E-SIGN. From E-SIGN, "This subchapter [Title 15, chapter 96, subchapter I] does not—

(1) limit, alter, or otherwise affect any requirement imposed by a statute, regulation, or rule of law relating to the rights and obligations of persons under such statute, regulation, or rule of law other than a requirement that contracts or other records be written, signed, or in nonelectronic form; or

(2) require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party."

You can price products differently if E-SIGN is opted for and some products may not be available without E-SIGN, such as an online loan. Could you require E-SIGN for online banking - perhaps but it would seem to be counter-productive. If a consumer does want online banking but does not want to be bound to E-SIGN you're sending that consumer to your competitor. And if they agree to E-SIGN, they have the right to cancel it at any time. The bank has to explain what happens and the costs if they do. So if they cancel E-SIGN will the bank remove them from online banking? Is E-SIGN critical to your online banking?
_________________________
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

Return to Top
#2266541 - 02/17/22 06:53 PM Re: ESIGN & Online Banking Enrollment Andy_Z
Bankwoman1 Offline
Diamond Poster
Joined: Dec 2015
Posts: 1,046
Midwest
Thank you Andy. I was pretty sure that we could not require it, but the question was asked of me this morning. The more I thought about it the more confused I made myself.

Let me ask you this. A customer enrolls for online banking on our website. During the enrollment process, they must agree to the terms & conditions for online banking. So, technically they are receiving the online banking T&C's electronically...correct? Does this mean they need to agree to our ESIGN agreement also at this time and if they don't, then we would proceed with the process with paper copies being mailed?

To answer your question, no, we would not remove a customer from online banking if they revoked their agreement to receive disclosures electronically. This is where we need to work on our procedures for tracking customers that have opted-in and those who have opted-out.

I appreciate your help in straightening me out! smile

Return to Top
#2266546 - 02/17/22 07:17 PM Re: ESIGN & Online Banking Enrollment Bankwoman1
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
I am not Andy, but E-Sign only applies to "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,........."

Your T&C is not included.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2266548 - 02/17/22 07:31 PM Re: ESIGN & Online Banking Enrollment rlcarey
Bankwoman1 Offline
Diamond Poster
Joined: Dec 2015
Posts: 1,046
Midwest
I think I am getting confused (or confusing myself) because our online banking T&Cs state:

Changes in Terms. We can change these terms by giving you notice as required by
law. Continued use of our internet service by you after notice of a change in terms
constitutes acceptance of the change.

Notices. Notices must be in writing and mailed or hand delivered, except that we can
give them to you electronically if you have so consented. Notices to you are effective
when given, regardless of whether you receive them. Notices to us are effective only
when we actually receive them.

So, by making the above statement about notices being in writing & mailed unless they have consented, does this mean we need for them to agree to an ESIGN agreement? Have we made it a requirement by having this statement in our T&Cs?

Or am I understanding this all wrong?

Return to Top
#2266549 - 02/17/22 07:46 PM Re: ESIGN & Online Banking Enrollment Bankwoman1
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Your T&C is a contract and has nothing to do with "if a statute, regulation, or other rule of law requires" . While it is probably in your best interest to have written T&Cs agreed too - it is not required by law.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2266551 - 02/17/22 07:56 PM Re: ESIGN & Online Banking Enrollment rlcarey
Bankwoman1 Offline
Diamond Poster
Joined: Dec 2015
Posts: 1,046
Midwest
Thank you Randy! Sorry to be such a pain but this ESIGN stuff really confuses me!

I appreciate all of your help!

Return to Top
#2266567 - 02/18/22 12:04 AM Re: ESIGN & Online Banking Enrollment Bankwoman1
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
The best way to avoid confusion is to think about ESIGN as a license, not a regulation. With it, you get one thing--legal authority to deliver federally-required notices and disclosures in electronic form--with the assurance that federal courts MUST treat them as the legal equivalent of paper-based notices and disclosures. For all purposes other than "written" delivery of federally-required material, ESIGN (or UETA) consent would be evidence of a binding contract, but not absolute proof. Your service agreements are contracts, so you'll need to follow advice of the bank's general counsel as to the expectations of the courts where you will need to enforce those contracts.
_________________________
...gone fishing.

Return to Top
#2266572 - 02/18/22 01:19 PM Re: ESIGN & Online Banking Enrollment Richard Insley
Bankwoman1 Offline
Diamond Poster
Joined: Dec 2015
Posts: 1,046
Midwest
Thank you Richard! I appreciate the input and plan on printing this whole conversation out and hanging it on my cubicle wall to help keep me straight!

Return to Top
#2266932 - 02/25/22 10:21 PM Re: ESIGN & Online Banking Enrollment Bankwoman1
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
Two important points I'd point out is Richard noted "federally" required disclosures and I'd emphasize federally. Another issue to add to the confusion is the chicken or the egg - which came first? E-SIGN begs the same question, is E-SIGN always necessary in advance to make e-disclosures? No.

A lot of demonstrable consent is conditioned on the fact that "if they can't see it, they can't consent to it." The converse is sometimes true that they had to see it to get there. Example, Reg B allows that many disclosures required on a loan app can be delivered in e-form without prior E-SIGN consent. Think GMI, income from alimony, child support, etc. (Look at (4)(d)-2 as an example.) Many allowances are made for things application or advertising/solicitation related. Those are necessary things but E-SIGN isn't required first. This was all clarified in 2007 and B, E, M, Z and DD were all set to allow for certain exemptions where these chicken or the egg issues came up even if they weren't clearly "required to be made in writing" issues. The rule writers felt that some early disclosures that were required could not be possible or would be difficult at best, if E-SIGN was required first and this would not really protect consumers but deprive them of these services. Who wants to contact a bank and go thru demonstrable consent just to fill out an app and shop for credit?
_________________________
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

Return to Top
#2276643 - 10/13/22 06:16 PM Re: ESIGN & Online Banking Enrollment Andy_Z
cornichon Offline
New Poster
Joined: Mar 2019
Posts: 4
Originally Posted by Andy_Z
You cannot require a consumer to agree to E-SIGN. From E-SIGN, "This subchapter [Title 15, chapter 96, subchapter I] does not—

(1) limit, alter, or otherwise affect any requirement imposed by a statute, regulation, or rule of law relating to the rights and obligations of persons under such statute, regulation, or rule of law other than a requirement that contracts or other records be written, signed, or in nonelectronic form; or

(2) require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party."

You can price products differently if E-SIGN is opted for and some products may not be available without E-SIGN, such as an online loan. Could you require E-SIGN for online banking - perhaps but it would seem to be counter-productive. If a consumer does want online banking but does not want to be bound to E-SIGN you're sending that consumer to your competitor. And if they agree to E-SIGN, they have the right to cancel it at any time. The bank has to explain what happens and the costs if they do. So if they cancel E-SIGN will the bank remove them from online banking? Is E-SIGN critical to your online banking?

I'm confused by your interpretation of this that you cannot require a consumer to consent to E-SIGN. Part 2 there says the act doesn't require anyone to consent to E-SIGN, but I don't know why that would mean our bank couldn't require anyone to consent in order to get a particular service.

Return to Top
#2276644 - 10/13/22 07:35 PM Re: ESIGN & Online Banking Enrollment Bankwoman1
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
The subtle difference between "pass" and "fail" is the existence of a requirement.You can develop purely electronic products and make them available to anyone who qualifies. One of those qualifications is willingness to consent to e-delivery of all documents...including "written" federal disclosures. Applicants for these products OFFER their consent at the outset of the application/enrollment process. Consumers who do NOT wish to communicate electronically are free to select a different product. When you approve the e-only application, you are accepting (not requiring) the customer's representations and qualifications--including the terms of the ESIGN consent.

This "anti-cram-down" language is there in ESIGN to prevent businesses from forcing e-communication on unwilling consumers.
_________________________
...gone fishing.

Return to Top

Moderator:  Andy_Z