July 07, 2020

NAFCU-sought bill to modernize E-SIGN introduced in Senate

computerSens. John Thune, R-S.D., Jerry Moran, R-Kan., and Todd Young, R-Ind., have introduced NAFCU-sought legislation to amend the Electronic Signatures in Global and National Commerce (E-SIGN) Act so that it reflects technological advancements and consumer preferences, as well as reduces burdens on financial institutions.

"NAFCU has long supported E-SIGN modernization, and we appreciate Senators John Thune, Jerry Moran and Todd Young for working with us to update our laws," said NAFCU President and CEO Dan Berger. "During this challenging and difficult time, it is important policymakers remove regulatory roadblocks that limit consumers’ financial flexibility. This legislation will do just that by making it easier for consumers to manage their finances using online and digital technologies."

The bill, the E-SIGN Modernization Act (S. 4159), aims to "streamline how consumers consent to receiving electronic documents like bank statements, account information, and contracts," a release from the senators states.

It would specifically remove the unwieldly requirement that consumers prove they can access documents electronically before they can agree to receive digital versions. Instead, the bill would allow documents to be sent electronically once the consumer is provided with disclosure information and consents to receive them via digital means.

In light of the coronavirus pandemic, NAFCU has urged the CFPB to modernize electronic disclosure and signature-related provisions of all its regulations, and also recommended legislative amendments to update the E-SIGN Act. The association has also provided recommendations for the bureau's Taskforce on Consumer Financial Law "to alleviate regulatory burdens, improve access for consumers, and mitigate ambiguities," including by addressing credit unions' e-sign concerns.

The bureau last month said it will take a flexible approach to its supervisory and enforcement practices related to electronic credit card disclosures amid the coronavirus pandemic by not citing violations or bringing an enforcement action against a card issuer "that during a phone call does not obtain a consumer's e-sign consent to electronic provision of the written disclosures required by Regulation Z, so long as the issuer during the phone call obtains both the consumer's oral consent to electronic delivery of the written disclosures and oral affirmation of his or her ability to access and review the electronic written disclosures."

NAFCU will continue to work with Congress and the CFPB to modernize outdated provisions of the E-SIGN Act.