the wild and wooly world of e signatures
Download
Skip this Video
Download Presentation
The Wild and Wooly World of E-Signatures

Loading in 2 Seconds...

play fullscreen
1 / 29

The Wild and Wooly World of E-Signatures - PowerPoint PPT Presentation


  • 209 Views
  • Uploaded on

The Wild and Wooly World of E-Signatures. Dino Tsibouris [email protected] (614) 360-1160 www.tsibouris.com. Why use them?. Allows online applications Electronic disclosure delivery Paperless and easy. FFELP Loans Already Use “ESIGN” Isn’t it the Same for Alternative Loans?. NO!

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Wild and Wooly World of E-Signatures' - JasminFlorian


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the wild and wooly world of e signatures

The Wild and Wooly World of E-Signatures

Dino Tsibouris [email protected]

(614) 360-1160 www.tsibouris.com

slide2
Why use them?
  • Allows online applications
  • Electronic disclosure delivery
  • Paperless and easy
slide3
FFELP Loans Already Use “ESIGN”

Isn’t it the Same for Alternative Loans?

  • NO!
  • FFELP Loans: Agreement wording, format and pricing prescribed by a unique federal program
  • Alternative Loans: Agreement wording, format and pricing regulated by differing state laws and federal consumer protection statutes
slide4
FFELP Loans Already Use ESIGN

Isn’t it the Same for Alternative Loans?

  • Title I, Section 107(b)(3) of ESIGN gave ED one year to create electronic promissory notes under Section 432(m) of the HEA
  • A promissory note must be in writing… BUT…
slide5
FFELP Loans Already Use ESIGN

Isn’t it the Same for Alternative Loans?

ED still pays benefits if collection defense arises from the use of an electronic signature!

  • Avoids state law contract requirements
  • Insures against any “questions”
slide6
FFELP Loans Already Use ESIGN

Isn’t it the Same for Alternative Loans?

  • Alternative loans are state-law based consumer loans
  • A “promissory note” must be in writing
  • Not guaranteed by ED if problems arise
slide7
ESIGN Loans: A Long Term Liability
  • Lender is responsible
  • Outsourced vendors limit their liability
  • Portfolio purchasers hold you responsible
  • Long loan maturity plus statute of limitations
slide9
Three Forms of Legal E-Signatures
  • “Click-wrap” agreements
  • E-SIGN Act (federal law)
  • Uniform Electronic Transactions Act (state law)
slide10
Click-Wrap Agreements
  • Must display terms on the screen
  • Consumer must agree, submit or apply
  • Agreement is formed!
  • Suited for credit applications
slide11
Click-Wrap Agreements
  • Acceptance or rejection must occur before access is given
  • Viewer must be forced to expressly and unambiguously manifest either assent or rejection prior to being given access to the product
  • Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d. Cir., 2004)
slide12
Loans Must Be in Writing, Though
  • Promissory Note is a contract detailing the terms of a promise by one party to pay a sum of money to the other
  • The terms must include the principal amount, the interest rate if any, and the maturity date
  • Payee's rights in the event of a default
slide13
Loans Must Be in Writing, Though
  • The term "negotiable instrument" is limited to a signed writing that … promises payment of money
  • http://law.justia.com/ohio/codes/orc/jd_130303-5481.html
slide15
The ESIGN Act
  • State that a signature, contract, or other record cannot be denied legal effect solely because it is in electronic form
  • A contract … may not be denied legal effect … solely because an electronic signature … or record was used in its formation
  • BUT does not apply to the law of promissory notes
slide16
The ESIGN Act
  • Deliver consumer disclosures electronically
  • Use of electronic records
  • Other forms of agreements

(Non-negotiable)

  • Authorizes “transferable records” but only if secured by real property
slide17
The ESIGN Act
  • Conspicuous ESIGN disclosure FIRST
  • Consumer consent NEXT
  • THEN disclose terms…
slide18
The ESIGN Act Disclosure Must Include
  • Scope of electronic communications
  • Method of providing electronic communications
  • How to withdraw consent
  • How to update records
  • Hardware and software requirements
  • How to request paper copies
  • Termination/Changes
slide19
The ESIGN Act Then Permits

Delivery of Disclosures

  • Initial Truth-in-Lending Act disclosures
  • FCRA disclosures
  • State law disclosures governing extension of credit
slide20
Internet Lending

The Other Disclosures

  • FCRA requires “clear and conspicuous” disclosure
  • But small type on back of mailer in a paragraph of type about other matters inadequate; Use different type, color - Cole v. U.S. Capital)
slide21
The ESIGN Act Does Not Preempt

State Law Consumer Disclosures

  • Examples:
    • Credit grantor disclosures
    • Cosigner notices
    • Notices near the signature line
    • Font size and proximity requirements
    • Record retention requirements
slide22
The ESIGN Act Disclosure Required

Errors in ESIGN compliance result in failure of delivery of consumer disclosures

slide23
The ESIGN Act Disclosure Required
  • Delivery fails even if proper text of the disclosure is given
  • Complete compliance with ESIGN is required to subsequently provide E-disclosures
  • Otherwise must give disclosure in paper form
slide24
Uniform Electronic Transactions Act
  • Creates electronic “transferable records” similar to paper promissory notes
  • Doesn’t provide for disclosure delivery
  • The parties merely have to agree to do business electronically to benefit from UETA
  • Determined by the circumstances (email?)
slide25
Uniform Electronic Transactions Act
  • “Transferable records” only exist if the authoritative copy can be identified
  • Independent registry best way to determine who controls the authoritative copy
slide26
Uniform Electronic Transactions Act
  • Control environment must be independent of lender and secure or the system fails and the loan status becomes legally uncertain
slide27
Uniform Electronic Transactions Act
  • May have to specifically opt out to avoid being drawn into UETA online
  • Very complicated practical application to lending
  • Legal certainty of loan proportionate to integrity of system where loan originates and independent company acting as registry
slide28
E-Signatures

Vendor Management – Key Issues

  • Compliance with law and regulations
  • Limits on use of data, FCRA
  • Audit rights
  • Notice if breached
  • Indemnity for claims and losses
  • No limit on liability
ad