Esign and commercial loans

Posted By: CloudShape

Esign and commercial loans - 08/23/21 01:05 PM

Stupid question time.

I have dealt with ESIGN on the consumer side, but we are rolling out online applications for business loans. No auto decisioning (I think), just the ability to apply and submit information. I have dealt with ESIGN on the consumer side and always assumed (yes, I know what assume does) that it only applied to consumers but our vendor is asking for disclosures to be included during the application process. One of the disclosures they are asking for/about is the ESIGN disclosure. Do we need to include ESIGN? I can understand including information about system requirements and asking about if they prefer to receive disclosures and notices electronically, but not sure about the ESIGN requirements for confirming they can receive electronic disclosures, especially since the vendor appears to have an "I agree to all terms and conditions" check box rather than individual check boxes for the various disclosures.
Posted By: Richard Insley

Re: Esign and commercial loans - 08/24/21 11:24 AM

The pre-consent disclosures you describe are part of the "handshake" process outlined in ESIGN's Section 7001(c), titled "consumer disclosures." https://www.bankersonline.com/regulations/esign-7001

You engage in the ESIGN "handshake" for a single purpose--so that your outgoing electronic documents become "written" or "in writing" (the legal equivalent to paper.) Not all documents must be delivered "in writing." To make that determination, you have to look at the federal law, regulation, or other rule that requires delivery of the document in question.

Typically (but not always), federal disclosures required in transactions with consumers must be delivered "in writing." See, for example, Section 1005.4(a)(1) of Regulation E. Since federal consumer protection laws only apply to consumers (with minor exceptions), none of these disclosures ("written" or otherwise) must be delivered to entities that are not "consumers."

Even if there's a legal requirement to deliver "written" documents to businesses, you don't need to follow ESIGN's "informed demonstrable consent" rules (the "handshake") to make the delivery electronically. A simple service agreement will generally suffice for e-communications with any non-consumer entity.
Posted By: CloudShape

Re: Esign and commercial loans - 08/24/21 01:29 PM

Thank you. Demonstrable consent is an ongoing battle on the consumer side and I was thinking I didn't have to fight it on the commercial side. Just make sure the system requirements and agreements/acknowledgements are all there.
Posted By: Richard Insley

Re: Esign and commercial loans - 08/25/21 03:56 AM

One way to draw a line in the sand is to declare (internally) that consumer opt-ins must be handled under the ESIGN rules and non-consumer opt-ins must be handled under your state's UETA. (The main difference between the two laws is ESIGN's unique opt-in system for consumers, ONLY.)