How to put your customers at ease about the validity of electronic signatures

How to put your customers at ease about the validity of electronic signatures

In today’s digital age, electronic signatures (eSignatures) have become an integral part of our lives. They offer convenience, efficiency, and sustainability. However, many people still have doubts about their validity and legality. In this blog, we will explore the validity of electronic signatures and how to put your customers at ease when using them. We will also delve into the legal implications of eSignatures, their types, and their suitability for various documents.

What is an eSignature?

Electronic signatures, often abbreviated as e-signatures, are digital counterparts of traditional handwritten signatures. These electronic representations come in various forms, each with its own level of security and reliability. 

What are the different types of electronic signatures?

Simple eSignatures may be sufficient for casual agreements, while advanced and qualified eSignatures are necessary for more critical and legally binding documents. Featured below are the primary types of eSignatures used more commonly:

Simple Electronic Signature (SES)

Simple Electronic Signature (SES): Widely available and affordable, these unencrypted digital signatures can be as simple as typing your name or drawing a signature with a stylus on a touch screen. 

Designed for everyday transactions, where convenience and efficiency are the priority rather than high levels of security and legal compliance, SES don’t require any additional identity authentication and are not legally binding. 

If challenged in court, the “signer” can claim their signature was forged, since there is no identity authentication. Transactions that use an SES can be implemented using the signer’s email address or verification via a unique access code, making them more susceptible to fraud than other types of eSignatures.

Common use cases for a SES include email communication, online forms and surveys, e-commerce transactions, internal company documents, personal documents, online agreements, class permission slips, creative works by artists, social media and forums, and informal acknowledgments, such as acknowledging receipt of email or confirming attendance at virtual events.

Advanced Electronic Signature (AES)

Advanced Electronic Signature (AES): An advanced eSignature is a step up from SES, offering a higher level of authenticity, including additional security measures such as password protection and PINs

AESs typically require stronger authentication methods, such as biometric verification, digital certificates, or two-factor authentication, to ensure the identity of the signer. Typically, these requirements are delivered via the use of a public-key infrastructure (PKI), which involves the use of certificates and cryptographic keys.

These additional security measures make AES suitable for a wide range of applications where trust, legality, and data integrity are paramount.

Uses cases for AES include legal agreements, financial transactions, such as consumer credit and loan agreements  and online bank data and funds transfers, government and regulatory compliance, real estate transactions, intellectual property and copyright protection, HR and employment contracts, legal and notarial services, insurance policies, and supply chain and logistic forms, such as for customs.

Qualified Electronic Signature (QES)

Qualified Electronic Signature (QES): These are the most secure eSignatures, often requiring a digital certificate from a trusted certification authority. They are created by a qualified signature creation device (QSCD) and are legally equivalent to traditional, handwritten signatures in many jurisdictions. 

A QES is in accordance with the European Union’s eIDAS (Electronic Identification, Authentication, and Trust Services) Regulation and is considered the most secure and legally recognized form of electronic signature within the EU.

The legal recognition and requirements for QES may vary by country and region, so it’s essential to consider local regulations and standards when using QES for specific use cases.

Common use cases for a QES include healthcare records and patient consent, international transactions, electronic identity documents, government and public services applications, online voting, and long-term archiving. QES is also used for many of the same purposes as those listed under AES. 

Importance and benefits of using eSignatures

eSignatures offer numerous advantages and play a crucial role in modern document management for individuals and businesses. Here are some of the key importance and benefits of using eSignatures:

  • Convenience and Efficiency: eSignatures reduce the time and effort required for document signing, making processes quicker and more streamlined. ​​Signers can access and sign documents from anywhere with an internet connection, reducing the need for physical presence and manual handling of paper documents.
  • Improved accuracy:  Errors and omissions associated with manual data entry and document handling are minimized. The digital process can include validation and mandatory fields to ensure completeness and accuracy.
  • Enhanced security: eSignatures often provide encryption and authentication features to ensure the integrity of the signed document. Audit trails and timestamps provide a secure record of the signing process.
  • Cost savings: The elimination of printing, shipping, and storage costs associated with paper documents can save significant amounts of money.
  • Improved customer experience: eSignatures make it easier for customers and clients to do business with your organization, especially in online and remote transactions. The streamlined process is more efficient and user-friendly.
  • Environmental benefits: eSignatures reduce paper consumption, contributing to a more sustainable environment.
  • Integration with other systems: Many eSignature platforms, such as airSlates’s SignNow, offer integration with other software and systems, such as document management, CRM, and ERP systems, for seamless workflow automation.
  • Scalability: eSignatures can be easily scaled to meet the needs of small businesses, large enterprises, and every type of business in between.
  • Global reach: Organizations can conduct business with partners, customers, and clients across the world without the constraints of physical proximity.

Understanding eSignature validity and whether it’s legally binding

The legitimacy of eSignatures is determined by a combination of factors, including the specific legal framework in the relevant jurisdiction, the technology used to create and verify the eSignatures, and the processes and security measures in place. 

For an electronic signature to be legally binding, it must meet several key elements that demonstrate the intent of the parties involved and ensure the authenticity and integrity of the signed document. These elements may vary by jurisdiction, but they generally include the validity and legality of an eSignature which depends on several factors, including: 

  • Legal framework and regulations: The most critical factor is the legal framework in the jurisdiction where the document is to be signed. Many countries and regions have enacted laws and regulations recognizing the legality of eSignatures. In the U.S., for example, the Electronic Signatures in Global and National Commerce Act (ESIGN Act ) and the Uniform Electronic Transactions Act (UETA) govern the legality of eSignatures, granting them the same legal status as traditional wet-ink signatures. In the European Union, the eIDAS regulation standardizes the rules for electronic signatures, ensuring their legal validity and cross-border recognition. Under eIDAS, all three eSignatures types are legally binding, but advanced and qualified eSignatures provide higher levels of security and are often required for specific transactions or documents.
  • Authentication and identity verification: The legitimacy of an e-signature often depends on the strength of the authentication and identity verification methods used during the signing process. Strong authentication methods, such as multi-factor authentication (MFA) or biometrics enhance the credibility of the eSignature.
  • Consent and notification: Parties involved in the signing process must agree to use eSignatures. Without consent and notification, the eSignature may not be legally binding.
  • Intent to sign: The person signing the document must intend to be bound by the terms of the document. This can be achieved through actions like clicking “I agree” or entering their full name, or drawing their signature using a mouse or stylus.
  • Security: There must be security measures to the eSignature process, such as encryption and secure transmission. An audit trail should record the entire eSignature process, including the actions taken by signers. Timestamps provide a secure record of when the signature was applied.
  • Industry-specific regulations: Some industries have specific regulations that apply to eSignatures. For example, healthcare organizations must comply with HIPAA regulations, and financial institutions must follow regulations like the E-SIGN Act.
  • Record management and retention: Many jurisdictions require electronically signed documents to be retained for a specific period. Compliance with record retention requirements is crucial. The document should be transmitted and stored securely to prevent tampering or alterations. Encryption and secure transmission protocols help maintain the document’s integrity.

Validity periods of electronic signatures in different jurisdictions

The validity period of eSignatures can differ from one jurisdiction to another. While some may have no specific time limits, others may require the preservation of eSigned documents for a certain period to maintain their legal validity.

Best practices for ensuring the longevity of electronic signatures

To ensure the long-term validity of eSignatures, it is crucial to follow best practices such as:

  • Compliance with legal frameworks: Ensure that your eSignatures comply with the legal framework in your jurisdiction. Stay updated on any changes to regulations and standards that may impact the use of eSignatures.
  • Select a reputable eSignature provider: Choose an eSignature service provider with a good track record and a commitment to security and compliance. Reputable providers stay current with legal requirements and best practices.
  • Use advanced or qualified eSignatures when appropriate: Employ advanced or qualified electronic signatures, as defined by the relevant laws, for documents that require a higher level of security and legal recognition.
  • Implement security practices: Consider using digital signatures with public key infrastructure (PKI) technology for added security. PKI provides a robust framework for creating and verifying eSignatures. Use encryption to protect the integrity of signed documents. Ensure that documents are securely transmitted and stored to prevent tampering.
  • Authentication and identity verification: Implement strong authentication methods to verify the identity of signers. Multi-factor authentication (MFA) and biometrics enhance security and longevity.
  • Documentation and records management: Keep detailed records of your eSignature processes, including policies, procedures, and audit trails. Proper documentation is essential for verifying the legitimacy of eSignatures in the future and can provide evidence of the signing event and any subsequent modifications.
  • ​​Document retention: Establish a policy for the retention of electronically signed documents, ensuring that they are stored securely and are accessible for the required duration as per legal and regulatory requirements.

Legal implications: Electronic signatures in court proceedings

While the legal recognition of electronic signatures is growing, specific case law and precedents continue to evolve. Some landmark cases involving electronic signature disputes have provided valuable insights into their legal implications. However, the landscape may vary by jurisdiction. Here are a few notable cases and examples:

  • In Barwick v. GEICO the validity of the UETA law was put to the test. An insurance client waived the minimum medical coverage on her insurance plan using a click-to-sign e-signature. She later claimed the eSignature was not binding. The Arkansas Supreme Court upheld a summary judgment finding in favor of the insurance company, GEICO.
  • Effective June 11, 2020, the Massachusetts Supreme Judicial Court updated its order authorizing the use of electronic signatures by attorneys and self-represented parties.
  •  In Espejo v. Southern California Permanente Medical Group (2016) 246 Cal. App.4th 1047, the California Court of Appeals found an electronic signature was authenticated because the employer could provide evidence detailing (1) the electronic review and signature process for employee agreements, (2) the security precautions regarding transmission and use of an applicant’s unique username and password; and (3) the steps a signatory would have had to take to place his or her name on the signature line of the agreement.

Admissibility and challenges of eSignatures as evidence in court

It’s crucial to consult with legal counsel and consider the specific laws and regulations in your jurisdiction when using electronic signatures in court proceedings. As technology and the legal landscape continue to evolve, it’s essential to stay informed about the latest developments in eSignature law and case law specific to your area.

To ensure eSignatures are admissible in court, it is essential to:

  • Keep a comprehensive audit trail
  • Implement stringent security measures during the signing process
  • Use reputable eSignature platforms with a track record of legal compliance

What types of documents can be signed electronically?

A wide range of documents can be signed electronically as long as they meet the legal and regulatory requirements for electronic signatures in the relevant jurisdiction. Here are common types of documents that can typically be signed electronically:

  • Contracts: Both simple and complex contracts can be eSigned, provided they meet legal requirements
  • Financial documents: Loan agreements, tax forms, and financial contracts can be eSigned.
  • Real estate documents: Deeds, leases, and purchase agreements can be signed electronically.
  • HR and employment documents: Employment contracts, onboarding forms, and more can all be eSigned
  • Government and regulatory forms: This includes tax documents, license applications, permit applications, and government contracts
  • Healthcare documents: Patient consent forms, health records, HIPAA-related documents
  • Intellectual property: Copyright assignments, licensing agreements, patent applications 

Industries and use cases embracing electronic signature technology

eSignature technology has gained widespread adoption across various industries and use cases, driven by the need for efficiency, security, and the digitization of business processes. Here are some industries and use cases that have enthusiastically embraced electronic signature technology:

  • Financial services: Banks and financial institutions use eSignatures for loan applications and account openings.
  • Healthcare: Medical consent forms and patient records can be securely signed electronically.
  • Real estate: Real estate professionals use eSignatures for property transactions and lease agreements.
  • Legal: Law firms use eSignatures for legal contracts and document filings.

In the ever-evolving digital landscape, eSignatures are here to stay, offering a reliable and efficient way to sign documents while meeting legal requirements. Get all your electronic signature needs sorted with airSlate’s SignNow: a powerful and flexible automated document solution that works with any device and operating system and can be easily integrated with a wide range of business apps — Google Drive, Oracle, Salesforce, Office 365, Egnyte, and NetSuite. For the ultimate confidence in eSignatures, consider SignNow’s recently launched QES (Qualified Electronic Signature) feature, which provides the highest level of security and legal validity. 

You can sign documents online and configure complex eSignature workflows without having to worry about privacy- and security-related issues. It’s backed up by SOC 2 Type II and PCI DSS certification and maintains compliance with FERPA, CCPA, HIPAA, and GDPR

airSlate’s SignNow is legally binding in any country that has passed legislation for electronic signatures. Try it for free today and experience the benefits of a cutting-edge eSignature solution.

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