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Clinton E-Signs Off on Digital Signatures

Electronic signatures now carry the same legal weight as their pen-and-paper counterparts

By Sam Costello, IDG News   

Also known as E-Sign, the bill gives digital signatures the same legal weight as those signed on paper. It passed definitively through Congress two weeks ago.

Clinton said E-Sign would "open up new frontiers of economic opportunity while protecting the rights of American consumers."

"The new law will bolster e-commerce by eliminating companies' fears about the enforceability of online commerce," according to a written statement released by the White House.

Electronic signatures--unique pieces of encrypted code assigned to individuals to avoid forgery and theft--can be used online in all applications in which their paper and ink counterparts would be used offline. Uses include signing financial applications, bills, and legal documents. Replacing paper documents with electronic ones will, according to the White House, greatly speed online applications, such as mortgage applications, and some purchases, such as insurance. The statement also noted that digital signatures will allow companies to replace paper records with electronic ones.

Users Can Opt Out

The bill, which passed 426-4 in the House of Representatives and 87-0 in the Senate, requires that online users give their affirmative consent to use electronic versions of paper forms and allows them to opt for offline equivalents. It also requires that businesses or agencies disclose to users the hardware and software required to perform the electronic signing and that the user is given the same legal protections online as they would have offline.

Clinton said the new law was necessary because old laws were "holding back" e-commerce by their reliance on ink and paper for legally enforceable documents.

The signatures will use a key-based encryption system wherein a digitally encrypted unique private key will be assigned to each user. The key, in turn, can only be decoded by holders of a public key, such as businesses or government agencies.