Shaky Start for E-Signatures

Last summer, when now former U.S. President Bill Clinton signed the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), it seemed we were about to scale the next digital mountain.

Conceivably, from that point on, Internet users would be able to enter into contracts and seal the deal electronically. No exchanges of pleasantries, no handshakes and no hassles.

Despite the great fanfare that accompanied the passage of the legislation, not much has been heard about e-signatures in a while. Why? Simply because the legislation had some significant glitches that make it somewhat less than fraud-and-foolproof.

For those who haven’t heard or thought much about it in these past many months, here’s a quick refresher course on how a lot of e-signature technologies work:

All Keyed Up

A user establishes a personal code, sometimes referred to as a key. Once established, that key can develop a digital fingerprint that second and third parties can verify. Anyone can have access to the user’s public key, but only the user has access to the private key.

Think of it much like the system you might use to access a safe deposit box at a bank. The bank and its employees have access to one key to the box, but only you have the other key. It takes both to open it. Sounds foolproof, right?

In addition to the public key technologies, digital signatures can also take the form of computer scans of the iris of someone’s eye, scans that are converted into a unique identity code.

Without going into all the tedious details, suffice to say the much of the digital signature technologies are mathematically based. The magic of numbers, e-signatures proponents would have us believe, will whisk us away into a lighter, paperless world. However, there are glitches: some glaringly obvious, others more subtle.

Lead the Witness Away

First, even those of us on the cheerleading squad for e-commerce wonder why those who drafted this bill overlooked the tradition of witnesses. Since when do we enter into major contractual agreements without a witness — or at least some other person who can say what documents or deals were signed, by whom and why.

The bigger problem is that it has been clearly shown that digital signatures can be stolen. Not only that, but for some unknown reason, those who framed this legislation neglected to put a cap on how much money an individual can be responsible for if his or her digital identity is used unlawfully.

That magic US$50 cap that serves as a security blanket for credit card users does not exist under the e-signature law.

Confusion and Illusion

Further, even though the encryption methods have been shown not to be fail-safe, and even iris scan codes can be stolen, the government did not build anything into the law that describes how and when to verify the e-signer’s identity.

Why? Possibly because lawmakers still do not have a full understanding of the technology that drives such legislation, and therefore often overlook what should be essential elements of new law.

According to some, the technological details were left out, so the industry could feel free to create its own standard. However, a standard for using digital signatures has yet to emerge.

Not a Good Sign

With all of these weaknesses, how did the digital signature legislation come to see daylight?

The simple answer is that the government wanted to make a high profile move toward digitizing commerce in the U.S. By signing the law, the outgoing administration made itself appear progressive, and the legislators enhanced their image as technologically enlightened leaders.

Still, sometimes even in the world of e-commerce, slow and steady wins the race. Had the security element of the technology been further developed and personal financial obligations been better defined, perhaps consumers and industry would be jumping on the e-signature bandwagon by now. But they are not.

Touching Base

There is a weightier issue involved here, sitting just behind the gadgets and fanfare surrounding the E-Sign Act. That issue is what to do about steadily decreasing levels of human interaction.

Picture this: A young newlywed couple decides to take a couple of giant leaps early in their lives. First they decide to buy a house and all the necessary insurance. Second, they decide to take some of that wedding gift money and invest it in the stock market.

Now that e-signatures are legal, conceivably they could accomplish all of it without ever leaving the desktop of their PC. No how-do-you-do’s, no intimidating conference room interactions and most significantly, no more experienced humans to guide them through these new high-ticket maneuverings.

The mortgage and insurance are negotiated, signed and closed online, and with a few keystrokes a brokerage account is activated without so much as a handshake. The happy couple is now doing business with the great unknown.

Hand it Over

What about that handshake? Since when do people want to eliminate people?

There is no debating the mathematical brilliance of those who developed the technology. But simple math cannot build a bridge between centuries of sacred trusts and a new world built on electronics.

When will the tech-heads and the lawmakers get it through their heads that people rely on other people by choice. The elimination of paper in our lives should not come at the expense of human interaction.

Listen Here

What more do consumers have to do to convince the e-commerce gurus that they want personal attention?

Study after study has shown that the major complaints online shoppers have are a lack of personalization and a lack of access to customer service agents. We want to hear a voice at the other end of the line, or at least see a pop-up window manned by a real live person.

Believe it or not, some of us still want to conduct at least some of our business face-to-face. We still want the reassurance that our transactions are being attended to by knowledgeable, trained personnel, and not simply by the magic of “encrypted algorithms.”

E-signatures will likely have a place in the new economy, perhaps most prominently in the business-to-business sector, but not until the kinks are worked out, and certainly not until the technology is seamlessly integrated with the most important element of all business transactions — the human touch.

What do you think? Let’s talk about it.