Compliance Blog

Lately, we've been getting a ton of calls regarding the E-Sign Act.  Well, the Electronic Signatures in Global and National Commerce Act, to be exact.   Part of this might be due to the fact that the Federal Reserve issued final rules to amend Regs DD, E, Z, M and B in the area of electronic disclosures.

The amendments place a much greater reliance on the E-Sign Act, so I'm guessing that many credit unions are reviewing its requirements.  In addition, electronic disclosures are a great way to save money. Which is a good thing.

Here are some general thoughts on the E-Sign Act:

• There are no implementing regulations for the E-Sign Act.  What you see is what you get.  And the Act itself is not all that long.
• From what I read, a common error at banks and credit unions is this: you cannot force members to receive electronic disclosures.  If you wish to take advantage of the E-Sign Act, you must make certain disclosures, and the member must consent to receiving the disclosures in a way that  “reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent.”
• Also, if a credit union changes hardware or software requirements that may prevent the member from obtaining access to or retaining electronic information, members must be notified of the new requirements and allowed to withdraw consent without charge.

But don't take my word for it.  Have a look at NCUA Regulatory Alert 01-RA-03, which details E-Sign Act requirements. The Regulatory Alert also includes a complete copy of the E-Sign Act itself.