Imagine clicking the mouse on your home computer to open a brokerage account, buy an insurance policy, or close your next home purchase - instantly, online.
Today, such transactions often require sluggish paperwork and pen-and-ink signatures. But Congress could soon change all this by sanctioning "e-signatures" - making contracts negotiated in cyberspace as legally valid as the old-fashioned paper variety.
At press time Nov. 9, the House was expected to vote to pass a GOP-sponsored bill that would set down a national standard for digital John Hancocks. A similar bill could come up for a vote in the Senate later this week.
Supporters say the legislation offers a vital tool for the expansion of Internet commerce, estimated to reach 1 trillion-plus transactions worth some $100 billion by 2003.
"Simply put, electronic commerce cannot grow unless there is a uniform standard for contracts," says a Republican congressional aide.
But Democrats, the Clinton administration, and consumer groups say other aspects of the bill dealing with electronic records would eliminate key consumer protections. States have also opposed the e-signature legislation, which forces the larger issue of who should regulate the Internet - the federal government, states, or the industry itself.
Under the House bill, the federal government would take the lead by laying down an overriding national policy that states must abide by, even as they gradually work to adopt their own standard in the form of the Uniform Electronics Transactions Act. E-signatures would work by using a variety of technologies to verify three things: a person's identity, the authenticity of the document signed, and the secure transmission of contracts over the Web.
Fingerprint scanners, eye-retina scanners, and signature pads that can be plugged into personal computers are some of the ways currently available to transmit signatures in cyberspace. A person could scan a thumb print, for example, in lieu of going to a notary public to validate a signature.
For consumers, e-signatures would mean far greater convenience in finalizing contracts ranging from brokerage accounts to home sales, supporters of the legislation say. "At 10 or 11 at night, after the kids are in bed, I can go online and negotiate for the best type of car insurance, or mortgage, or refinancing - and I can do it all online," says Rick Lane, director of congressional affairs for e-commerce at the US Chamber of Commerce here.
Businesses ranging from brokerage firms to real-estate agencies are eager to see the digital-signature legislation passed because it would eliminate days- or week-long waits for paperwork following online transactions. Internet brokerage accounts, for example, now make up about 25 percent of all retail stock trades and the share is expanding. The bill would also speed Web-based commerce in its fastest-growing sector: business-to-business transactions. By standardizing rules for contracts online, it would benefit firms in a range of industries, advocates say. "There is not a company engaged in e-commerce that does not support this legislation," says Mr. Lane. "It's not just important to the AOLs of the world, but to General Motors, which is contracting with suppliers to build parts."
Still, consumer groups criticize another aspect of the law, which would allow businesses to cut paperwork costs by notifying consumers electronically rather than in written documents of certain important changes, such as in interest rates or mortgage-servicing companies.
Although consumers can opt out of e-notification, some may not be aware of their rights, whereas others could face technological obstacles to receiving records electronically, critics say.
"There are some very bad actors out there who will take advantage of any loophole in the law to avoid providing information to consumers," says Margot Saunders of the National Consumer Law Center here. Bipartisan compromise legislation in the Senate only covers e-signatures while dropping the electronic-records provisions of the House bill.
(c) Copyright 1999. The Christian Science Publishing Society