E-statement rant

Grrrrr, I just have to vent. E-Statement compliance is driving me nuts!

We are trying to do everything by the book when it comes to e-statements, but it is becoming one gigantic pain in the neck. Customers are awful about fulfilling their side of the "electronic handshake" and so we spend countless hours babysitting those e-statement enrollees, trying to get them going on electronic statements. It is especially bad with our e-Checking account holders, who are "required" to have e-statements, but fail to finish e-statement enrollment.

What burns me up, however, are the big banks and credit card companies which simply turn customers on to e-statements and give one gigantic New Jersey Salute to E-SIGN requirements! Management wants to know why we can't just flip the switch and call it good. I'm holding firm, telling them about all the possible disclosure problems we could have as a result. I must admit, though, it does get hard when it seems like you're the only kid on the block playing by the rules.

Is anyone else sick of it?! I know it is a risk management call.... are any of you simply putting customers in e-statement delivery upon enrollment and forgoing demonstrable consent?

I've moved to a different bank, and my new bank was not doing anything to show demonstrable consent. "They signed up and said they could receive, isn't that enough?" I'm being mean as well, making them create reports to show who has not picked up their statements. However, I think it is a crazy regulation. I mean, if I as a customer provide a written statement taking the responsibility, isn't that enough? But we protect our consumers. We did have an issue where a customer forgot they had signed up, and came in 6 months later wondering why we weren't sending their statements. At least with demonstrable consent, we could prove they can pick up.

We recently started e-statements, and it is amazing how many customers either provide bad e-mail addresses or none at all. (I agree it's a training issue for our new account reps to collect an e-mail address.) I didn't back down either. We have reports that are reviewed daily for the "handshake".

When we researched it we decided the pain is much less that the fact that if they don't receive their statements we might be responsible for Reg E errors, etc. We simply don't turn off the paper statements until we see they have gotten on e-statement. We looked into simply turning the paper off but to many issues and risks.

What about Reg E liability rules - it doesn't seem enforceable if you did not abide by E-sign requirements and are not providing a paper stmt.

Exactly right! Anyone who goes tree-free but doesn't comply fully with ESIGN is walking straight into full Reg. E exposure.

Enrollment with our e-accounts is done in our branches. We sit in the office with them and have them log on and finish the enrollment process.

With all due respect to your process, working girl, unless your customers plan to come to your branch to access statements, how can you possibly show that they have provided "demonstrable consent" as required by the E-Sign Act? They need to show that they can access their statements on the computer they'll use to access things "live."

I want to disagree with you John (respectfully) but I am certainly no expert on e-statements. If they are able to sign in to a website to retrieve their statement why do we have to show it was from a specific computer belonging to them? What if they get a new computer? Do we have to re-do the demonstrable consent part over again? Repectfully yours, ELC.

When I find that the requirements of a law or regulation are complicated enough to confuse me, I try to step back and start over with an understanding of the purpose of the law or regulation.

With ESign, the purpose is to facilitate delivery and acceptance of electronic writings in lieu of paper, but with protections for consumers.

The purpose of the E-Sign requirement for demonstrable consent is to document that the consumer had the ability to access e-documents of the type anticipated in the agreement to accept them. There is no distinction between being able to access them from home and being able to access them at an internet café in Budapest. The assumption is that the consumer will understand the configuration requirements if any and will ensure that he or she has them before sending that demonstrable consent.

When the party wishing to provide e-documents (the bank in this case) controls the environment in which a consumer "consents" to the service -- as would be the case in the bank's branch office -- I think that an element of demonstrable consent is missing. I can't quite put my finger on what I think is missing, but ...

The missing piece is in the legislative history of ESIGN.

As the law was taking shape, business representatives insisted that they should be able to provide e-documents in almost any manner that a consumer would accept. Consumer activists insisted that e-documents should not be legal unless there was positive confirmation of receipt of each e-doc. The outcome (ESIGN) was a compromise.

Congress rejected positive confirmation as too burdensome and "anything goes" as too likely to deprive consumers of the content of the documents. As a middle-of-the road solution, Congress decided that positive confirmation is appropriate once--at the time the parties agree to e-delivery. If the business discloses the necessary ingredients for e-receipt and the consumer demonstrates receipt of a test document, then the law views this delivery system as being legally equivalent to paper.

After the business confirms that the consumer has passed the test, the consumer assumes full responsibility for receipt of the "live" document(s). All the business must do is make the e-delivery(ies) by the exact method tested.

Unless consumers have regular access to the bank-owned hardware and software used for the positive confirmation, they will not be able to receive, open, and print or save the e-document(s). Since the bank knows that the test e-delivery did not demonstrate the consumer’s ongoing ability to receive and use the e-docs, any consent obtained under these circumstances is probably meaningless.

Back to RebekahL's comments. I am battling the march towards automatically enrolling customers in e-statements and making them opt out because vendors are pitching this to management. Plus they can cite a number of other institutions that are doing so quite successfully. Obviously those other institutions do not have the same examiners that we do! Personally, I can't stand merchants who force me to take the time to opt out of something, especially when they bury the info and it takes me a few months to catch on. I then take my business elsewhere - so where's the customer service in cramming something new down onto customers? Sorry, off my soapbox now.

Now that the final rules for e-delivery is out there, where does that leave the E-sign act? other than as an out of date, in-effective and un-enforced act.

Don't the final rules refer to the E-sign act? How can you consider it out of date or un-enforced when the regulations require compliance with it?

The Fed has essentially abandoned its efforts to require anything beyond ESIGN. That makes ESIGN the supreme rule for e-delivery of any disclosure mandated by Fed Regs B, E, M, Z, and DD.

Why do you think ESIGN is out of date or ineffective? It's never been amended and I'm not aware that it's ever been challenged in court.

Enforcement is clearly a problem, but it's not ESIGN that needs to be enforced! Failing to live up to ESIGN's standards doesn't result in an ESIGN penalty because it has no penalties. Punishment comes from the law or regulation that required the "written" disclosures in the first place. If Reg. B says I have to deliver an adverse action notice in writing, for example, and I botched my attempt to use an ESIGN-qualified e-document for that purpose, then I didn't deliver an adverse action notice and my punishment comes from Reg B and the ECOA.

E-Sign is basically what we're left with. I'm with Richard that it is not so much a bad thing. My hope is that there aren't abuses otherwise that create a new need for enhanced regulatory burdens. And it doesn't bother me that there isn't a defined set of penalties that would compound other penalties such as from B, Z, DD, etc. Remember too that E-Sign isn't a banking rule, it applies to many industries and businesses.