The Catholic University of America

Summary of Federal Laws

Financial Aid Programs

Electronic Signatures in Global and National Commerce Act (also known as the

Millennium Digital Commerce Act, or ESIGN)

Pub. L. No. 106-229, 114 Stat. 464 (2000)

15 U.S.C. § 7001 et seq.

This law provides that a signature, contract or other record may not be denied legal effect, validity or enforceability solely because it is in electronic form or because an electronic signature was used in its formation. The law does not require anyone to use an electronic signature, and it also does not deny anyone the right to determine the means for authenticating an electronic signature. Records required to be kept by federal, state or local law may now be retained in electronic format if the record remains accessible to all who are entitled to access it, and it is in a form that can be retrieved for later reference. ESIGN applies to transactions in interstate or foreign commerce.

The statute defines electronic signature to include electronic sounds, symbols or processes, attached to or logically associated with something executed and adopted by a person with the intent to sign the record. The law is written in such a manner that any of a number of technologies might be used, from encryption-based "digital signature" systems, to an electronic signing pad, or the "ePad," developed by Interlink Electronics, which captures the image as well as data on the speed and curves of the signing, to create a record that will provide more secure verification. (See "E-Signatures Become Valid for Business," New York Times, Oct. 2, 2000.)

There are conditions under the law for satisfying written disclosures to consumers, such as those required by the federal Truth in Lending Act. E-mails or Web postings will be allowed if the consumer has affirmatively consented to the use of electronic communication, and not withdrawn such consent. Also, the consumer must receive a clear and conspicuous statement that informs the consumer of certain rights, and details the procedures for withdrawing consent. Finally, consumers must be given a statement of hardware and software requirements for access and retention of the electronic record.

The Department of Education announced a completely paper free way to obtain financial aid using a PIN. See Free Application for Student Financial Aid (FAFSA) online. The e-sign on the FAFSA page uses Secure Sockets Layer encryption to protect the students' confidential information. Smart cards can also be used to effect an electronic signature.

Certain transactions are excluded under the law. For example, wills and trusts will still require a written signature, and adoptions, divorces and other family matters require a written signature. State laws that interfere with electronic signatures are pre-empted, however, if the state has enacted the Uniform Electronic Transactions Act (UETA), that law applies unless inconsistent with ESIGN.

On June 26, 2001, the District of Columbia joined thirty six other states in enacting a version of The Uniform Electronic Transactions Act, (UETA) which is a model state law drafted to validate and facilitate the use of electronic records and signatures in commercial transactions.




NACUANOTES: Electronic Signatures in an Increasingly Paperless World 12-11-17 


 page updated 12-14-17