Fraud

What to Know About E-signatures

By Kim Boatman

Jill Ford, a Pinehurst, N.C., real-estate broker, needs little more than her laptop and a Wi-Fi connection to handle contracts for her clients these days.

Using an electronic signature service, Ford has streamlined the contractual process for both buyers and sellers. Legally binding documents are handled online in a matter of minutes, and her clients are thrilled. “It has already transformed much of how I do business,’’ she says.

A measure of security
Signing via e-signature might actually provide more security than using a paper and pen. With e-signatures, you can be uniquely identified as the signer. The document content can be locked through encryption technology, and the document can be time-stamped throughout the process. Archiving also alleviates worries about misplacing the document or even denying it exists.

In most cases, e-signature services simplify the process, making sure you know where to sign and initial by using indicators telling you to do so. Ford’s clients can’t complete a document without finishing all the necessary steps, she says.

Your e-signature checklist
Most of us already execute multiple e-signatures on a daily basis. “Checking out on Amazon and agreeing to terms of services online are technically electronic signatures,’’ says Daryl Bernstein, CEO of e-signature company RightSignature. “Basically, everybody has done electronic signatures, whether they know it or not.”

However, convenience should be paired with a bit of caution when it comes to legally binding transactions, say experts. Refer to this checklist before you use e-signatures for any important documents:

1.  Take your time. “The downside to the flexibility and convenience of the e-signature route is the ease with which you can immediately dismiss the fact that you’ve just executed a binding contract,’’ says Joy Butler, a Washington, D.C., attorney whose book The Cyber Citizen’s Guide Through the Legal Jungle: Internet Law for Your Professional Online Presence was released in May. “Don’t click and forget!”

2.  Use a reputable service. Make sure you’re signing a contract through a well-established e-signature service, and review that service’s security and privacy policies before you sign. Find out if the service has SSL certificates confirming that your information will be handled securely. The company should have undergone a SAS 70 Type II audit, which shows the service has adequate controls and safeguards when it processes your data, says Bernstein.

3.  Understand the archiving process. Ask how your document will be preserved, what your long-term access might be and what will happen to it if the e-signature business closes. To protect yourself, keep copies of all contracts you e-sign, advises Butler. “If you strive to be paperless, you can save a copy of the contract to a file that you can keep on your computer hard drive,” she says.

4.  Review document changes. Any amendments should require your consent, says Butler. Make sure you’re able to track all document changes.

5.  Look for encryption. To protect your privacy and security, check to see if your documents are encrypted. One sign to look for is “https” rather than “http” in the Web address.

Since e-signatures are legally binding, your comfort with the transaction is critical. If you have any doubts, request a traditional written contract, says Butler.