E-SIGN modernization should be part of next COVID-19 relief bill

July 23, 2020

The E-SIGN Modernization Act (S. 4159) should be included in the next phase of COVID-19 relief legislation, CUNA and other trade organizations wrote to Senate leaders supporting the bill Thursday. The bill was introduced earlier this month by Sens. John Thune (R-S.D.), Jerry Moran (R-Kan.) and Todd Young (R-Ind.). 

The bill would remove the requirement in the Electronic Signatures in Global and National Commerce Act requiring consumers to reasonably demonstrate their ability to access information electronically prior to consenting to electronic records. 

“The E-SIGN Modernization Act addresses a simple but important problem: federal law preferences paper-based processes over equivalent digital options that are beneficial at times of disruption. Consumers who request to engage digitally with companies through services, such as online banking, must jump through additional hoops that are not required when they choose paper-based processes delivered through arguably less-efficient methods, such as the mail.”

The organizations note that the onset of the pandemic has made complying with the E-SIGN Act’s reasonable demonstration requirement challenging, as financial institutions have faced hurdles to quickly implement loan modifications, transfer balances, complete service requests begun on paper over the phone, or fulfill requests from displaced consumers for access to digital services.

The organizations also note:

  • The reasonable demonstration requirement is an “unnecessary, outdated” feature from the early Internet era;
  • The bill was enacted with the knowledge that amending the bill to remove the reasonable demonstration requirement was foreseen;
  • Technological developments since 2000 has made removing the requirement easier, particularly with the widespread availability of web access software and formats such as PDFs;
  • Nine in ten Americans currently have access to the internet and persons over 50 years old also have widespread access to laptops, smartphones and tablets; and
  • The reasonable demonstration requirement has caused issues for entities of all sizes, particularly as financial institutions are working to reach consumers without access to a branch during the pandemic.

CUNA wrote to Congressional leaders earlier this week with a list of priorities for the next phase of COVID-19 relief legislation.