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E-SIGN Applicability to Compliance & Law

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Question: 
I am doing some research around E-SIGN and its applicability to both compliance and the law. While I know we have members in different states, and each state is different and any case law or state law, mentioned may not be binding in our "home" state, I would still be interested in how other jurisdictions are handling this. What is your take on courts requesting original signature cards? We have an in-house collections department, that will go to court to file judgement on charged-off checking accounts or past due loans. In our local courthouse a certain judge has often asked our collections manager for the original signature card, when she is trying to obtain judgement. At our bank, customer signature cards can be obtained a number of different ways. The most common is via a digital topaz screen (electronic screen that the customer physically signs when they open a new account). There are some situations however where the customer can not come to the branch and sign, so we will go to the customer and have them sign a “wet” signature paper form, and then we come back to the branch and scan that paper form to our customer accounts team. I am trying to find out if that scanned wet signature will hold up in court as an original (since after it is scanned we destroy the paper copy). Additionally we have circumstances when the customer is out of area, or someone is opening a joint account where only one party is present in the branch and we send out the signature form electronically to the other party via email and they “remote E-sign” via a digital signature (which is just a printed version of their name). I am wondering if these will hold up in court? Furthermore, have you ever seen where a bank will allow customers to completely doc-u-sign/ remote E-SIGN a loan application and all associated closing documents? Even the big players in this space (Rocket mortgage, Quicken loans) usually send a mobile Notary once all the paperwork is completed to come meet with you and obtain a wet signature on the paperwork. Our mortgage department has asked if instead of that wet signature at closing if an electronic signature would suffice in the courts. What about Deeds of Trust, can they have electronic signatures? I really appreciate your help or any insight you can provide via your years in banking. If you find or know of any relevant case law please let me know as that would certainly help in my analysis.
Answer: 

I am not an attorney, so this response focusses on principles, not the particulars of the laws and judicial standards where you do business.

Contracts are governed by state law and enforced in state courts. That includes signature cards (the portion of your deposit service agreement that specifies what token(s) must be presented before your company will perform the actions stated in your full service agreement for deposit accounts.)

A signature...any type of signature...is evidence of one or both of the following:
1. agreement to be bound by the terms of a contract with another person
2. acknowledgement of receipt of something (usually a document) from the other person

You would not be in court seeking a judgement unless one person believes the other has failed to live up to his/her obligations under the contract. The court will decide:
1. exactly what the contract does and does not require of each party,
2. whether or not each party has agreed to those terms, and
3. whether one or both parties have defaulted on their agreements.

Both your state's UETA (Uniform Electronic Transaction Act) and the federal ESIGN act tell the courts that they may not categorically disregard electronic signatures. Unfortunately, neither UETAs nor ESIGN define what is or is not an electronic signature or tell the courts how they are to determine the validity of an electronic token. Unlike ink on paper, the reliability of the technology underlying an electronic signature must be proven by the plaintiff. After you cross this first hurdle, you must then prove that the other person (the customer) agreed to use this technology to establish binding agreements. Finally, you must show that the token presented at the time of specific transactions under your overall service agreement is identical to the token agreed at the outset of your relationship.

Your company's attorney will determine what evidence you will need to provide the court in order to obtain favorable judgements...and it is your attorney who should be advising you now.

First published on 07/14/2019

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