What is eSign disclosure?

Electronic signatures accelerate the document-signing process and enable businesses to complete transactions from anywhere.

But it’s important to ensure that the signatures are legally valid and that both parties are aware of their right — which is where eSign disclosure comes in.

What is eSign disclosure?

Let’s take a look at the regulations surrounding electronic disclosures, and why they’re important for your business.

What is eSign disclosure?

An eSign disclosure, or electronic signature disclosure, is a statement that must be provided when someone agrees to sign a document electronically.

It ensures consumer protection in electronic communications, informing signers of their rights and prompting them to give affirmative consent by eSignature.

For example, if your bank asks you for an electronic signature when you open a new account, they must provide a consumer disclosure.

Before signing any document in an electronic format, you should read the disclosure information in full.

The statement sets out your right:

An eSign disclosure also covers the keeping of electronic and paper documents and the requirements for accessing them.

Understanding consent and disclosure in the E-Sign Act

Electronic signatures are regulated by the federal Electronic Signatures in Global and National Commerce Act (or ESign Act), a law that standardizes the collection, authentication, and enforcement of eSignatures and protects anybody making an electronic transaction.

The E-Sign Act governing electronic signature disclosure and consent took legal effect in the US as of June, 2000.

It establishes that electronic signatures, contracts, and records are valid or legally enforceable if they meet certain criteria, and permits the introduction of eSignatures in a court of law as evidence.

The Act defines an electronic signature as any electronic symbol, sound, or process attached to or associated with a contract or other record.

The legislation affords electronic signatures the same legal weight as “wet” ink signatures.

However, any type of signature is only valid if both parties clearly intended to sign — so both parties must consent to conduct business by electronic means.

Consumers must also agree to receive eSign consent disclosures as electronic documents, and all parties must have access to preferred authentication technologies.

The E-Sign Act doesn’t apply to certain documents, including:

The E-Sign Act is not to be confused with the Uniform Electronic Transactions Act (UETA), which is not a federal law.

It applies in 47 states, plus some districts and territories (the rest have other legislation for electronic transactions).

The UETA Act is mostly used for business and commercial contracts.

What are the E-Sign Act disclosure requirements?

Under the E-Sign Act, disclosure requirements include a “clear and conspicuous statement” informing the consumer of the rights and responsibilities surrounding electronic signatures, plus consent requirements.

  1. The Act doesn’t compel companies to provide non-electronic forms, but affords the right to request paper copies of disclosures. Companies must provide accurate contact information, explain how to obtain paper forms, and state whether any fee will be charged.
  2. A disclosure should identify whether the signer’s consent relates to a one-off transaction or to ongoing disclosures over the course of the business relationship.
  3. It must also cover the withdrawal of consumer consent, making it clear that the consumer has the right to do so. Companies must explain the procedure for withdrawing consent as well as the consequences, conditions, and fees.
  4. The Act mandates that consumers are provided with information on how to access electronic records. The disclosure should outline the hardware and software requirements for doing so, such as suitable operating systems or internet browsers. If those requirements change, the consumer must receive a revised statement.
  5. The statement must mention that eSign disclosure is subject to the Electronic Signatures in Global and National Commerce Act.

eSign consent disclosure also covers the use of electronic records.

To qualify as an electronic signature that meets the requirements of the ESIGN Act and the UETA, the system used to capture the transaction must retain an associated record that documents the process by which the signature was created.

Companies that issue electronic contracts must keep records of agreements to remain in compliance with legislative requirements.

The records must remain accessible to all parties for later reference for a specified period.

This period is regulated by the governing body or state agency with jurisdiction over the document.

Meeting requirements for record retention is made much simpler with software like PandaDoc, which automatically stores your documents in secure online archives.

Be clear and transparent with electronic signature disclosure

Now we’ve answered the question “What is eSign disclosure?”, how can you ensure your business meets the regulations?

Well, PandaDoc’s electronic signature features are designed to comply with both the UETA and ESIGN Act.

For every signed document, you’ll receive an electronic certificate so that you can keep a record of all your digital transactions.

As well as giving you confidence that every eSignature you receive is legal, PandaDoc speeds up document creation with templates and the completion process with electronic delivery.

You can sign PDF files, DocX files, and more. The free plan includes unlimited electronic signatures and document uploads.

Related questions

Disclaimer

Parties other than PandaDoc may provide products, services, recommendations, or views on PandaDoc’s site (“Third Party Materials”). PandaDoc is not responsible for examining or evaluating such Third Party Materials, and does not provide any warranties relating to the Third Party Materials. Links to such Third Party Materials are for your convenience and does not constitute an endorsement of such Third Party Materials.