House passes digital-signature bill

By a huge majority, the US House of Representatives approved a bill that will allow many electronic signatures to have the same legal standing as paper signatures.

The vote was 426-4 in favour of the bill, which last week came out of a House-Senate committee after the two bodies reached a compromise on the legislation.

The measure, SB 761, now goes to the Senate for a vote and then is expected to be sent to President Clinton. In a statement last week, the president indicated he supports the measure.

Before the House vote, Rep. Jay Inslee (D-Wash.) said the bill proves that high-technology matters are now fully ingrained in every facet of American life, even down to signatures in contracts.

"This is a great bill because it will allow business to move at the speed of light and not at the speed of paper," Inslee said.

David Butler, a spokesman for the Washington-based Consumers Union group, said the measure is a welcome package of protections for consumers and business online. "This bill, if enacted, will provide adequate protections for consumers looking to sign off on major business transactions using the internet,'' Butler said.

Among the protections in the bill for consumers, according to Butler, is a requirement that consumers give their formal consent to accept electronic documents if they choose to do so when signing a contract. If consumers at a later date change their minds, they may revert back to paper documents under the bill.

The measure also would require businesses to ensure that consumers who agree to electronic documents have the proper computer hardware and software to receive, open and read the documents electronically, Butler said. That can be done by sending a test message using the same software as the electronic documents to ensure they can be opened and read by the recipients.

The bill creates rules for the use of electronic signatures as legal, binding agreements and also outlines cases when only written signatures can be used.

The digital signatures bill -- known officially as the Electronic Signatures in Global and National Commerce Act -- had been stalled in a House conference committee for several weeks.

Some critics have assailed the bill as not tough enough to protect consumers from fraudulent use of their electronic signatures online. The biggest fear, critics argue, is the possibility of identity theft using electronic signatures.

Certain types of electronic signatures and documents won't be allowed under the bill. For example, documents related to wills, trusts, adoptions, divorces and other family law matters won't be able to use digital signatures for authentication.

Also forbidden from using digital signatures are court orders and other court documents, utility cancellation notices, foreclosure or repossession notices for primary residences and cancellation or termination notices related to health or life insurance. Product recall or failure notifications, as well as transportation documents for hazardous or toxic materials, must also continue to use paper documents and handwritten signatures, according to the bill.

The American Electronics Association lauded passage of the bill, saying digital signature usage is a "bottom-line issue for the high-tech industry". Meanwhile, Harris Miller, president of the Information Technology Association of America, said in a statement that the House vote is "an important milestone in the creation of the internet economy".

A House spokesman said he couldn't speculate on when the Senate will consider the measure, but didn't anticipate a long delay.

"We expect it will pass the Senate overwhelmingly," the spokesman said. "That's just overwhelming support in the House."