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Council Developing Standards for Electronic Signatures

A group of e-commerce and financial services companies are working together to develop a voluntary model Standards and Procedures for Electronic Records and Signatures (SPeRS). An organizational meeting of the SPeRS drafting committee was held Monday in the offices of the Electronic Financial Services Council in Washington, D.C. The project is expected to take nine months to one year to complete.

Initial members of the SPeRS drafting committee include Adobe, AIG, Dell Financial Services, Ernst & Young, Ford Motor Credit Company, FreddieMac, GE Capital Mortgage Corp., Intuit Inc., MassMutual Financial Group, Mortgage Guaranty Insurance Corporation, PricewaterhouseCoopers, Principal Financial Group, TIAA-CREF, Wells Fargo and Zions Bank/Digital Signature Trust. The ultimate size of the drafting committee is not expected to exceed 25 to 30 companies.

"The goal of the SPeRS project is to create industry-wide model standards and procedures for the presentation of information electronically, including electronic execution of signatures, record retention, printing and delivery of information. We are seeking to provide a reference guide for e-commerce participants, not a set of rigid rules," said Catherine Valentine, vice president and general counsel of Intuit Inc., and chair of the SPeRS Project.

The SPeRS drafting committee members believe that the new standards will fill an unmet need by assisting in establishing industry models for commercially reasonable and enforceable structures and processes for the use of electronic records; providing customers with a "common experience" across various online transactions, thereby increasing the customer's comfort level with the use of electronic records and signatures; and permitting businesses to establish a common understanding with vendors concerning design parameters for electronic documentation, without having to develop detailed custom specifications.

Among the issues that will be addressed by the SPeRS drafting committee include:

Development of commercially reasonable practices for establishing the identity and authority of a party seeking to establish an electronic account relationship;

Guidance regarding the provision of disclosures to consumers as required by the Federal ESIGN Act, including model terms, timing, and satisfaction of the "reasonable demonstration" test;

Practices for handling electronic signatures, including placement, establishing intent, description of signature processes and notarization;

Guidance on methods for displaying agreements and disclosures effectively, including providing conspicuous disclosures through scroll-boxes, dialog-boxes, use of hyperlinks, and placement of terms; and

Record retention, including the storing of records that need to be reviewed or referred to and the protection of records from alteration or substitution.

"With the enactment of the Federal Electronic Signatures in Global and National Commerce Act (E-SIGN) and the rapid adoption by the states of the Uniform Electronic Transactions Act (UETA), the statutory framework for enforceability of electronic records and signatures is now firmly established," said Jeremiah Buckley, partner in the Washington, D.C. office of Goodwin Procter LLP, who is acting as counsel of the SPeRS project. "The SPeRS project is an important next step on the road to full implementation of the E-SIGN and UETA legislation."

The Electronic Financial Services Council was established in 1998 to promote legislation and regulation designed to enhance the availability and delivery of financial services such as mortgage loans, insurance products, investment products, consumer loans and on-line banking. The EFSC played a leading role in securing passage of the Electronic Signatures in Global and National Commerce Act by the U.S. Congress.