Compliance with E-SIGN: Six-Step Mandatory Consent Process
Compliance with E-SIGN: 6 Step Mandatory Consent Process
E-SIGN Act: Are your e-statements legally valid?

Compliance with E-SIGN: 6 Step Mandatory Consent Process

Telecommuting, onsite, working from home, in the office, remote working, essential worker, work from anywhere — we are all working differently this year. Compliance with E-SIGN, E-Statements, and E-Disclosures is more important than ever for your financial institution. Ensuring your E-SIGN program is up to speed lets remote and in-office staff, plus quarantined customers, legally (and distantly) sign, access, and keep electronic documents.
Nancy Flynn of the ePolicy Institute said in a recent Community Bankers Webinar Network webinar that consent to do business electronically is one of the five E-SIGN Act legal requirements your bank cannot afford to gloss over. Account holders must receive disclosures from your bank and affirmatively agree to use e-records, meaning the customers must freely opt-in. Financial institutions cannot automatically switch customers or have an opt-out program.

The consent process has six mandatory steps under the E-SIGN Act. Each step must inform the account holders in a clear, complete, readable written disclosure. To do so, communicate important information in small, bite-sized parts when crafting your disclosures. The information needs to be easily understood and absorbed by the reader. Try to avoid run-on sentences, use bullets and numbered lists when you can, and include contact information for questions and concerns.

Step 1: Disclose electronic vs. paper options. Your bank is required to inform customers of:
  • Their right to receive paper records.
  • Their right to withdraw consent at any time. Instructions on how to withdraw should be very clear and simple.
  • Any consequences of withdrawing their consent. This may include termination of the relationship.
  • Any fees imposed in the event of withdrawal. Be very specific.
  • Their right to request paper copies of e-records and any fees associated with doing so.

Step 2: Consent choices. Is consent applied product-by-product, or is it an umbrella consent for all documents?

Step 3: Consumer actions. It is not enough to tell accountholders they can withdraw their consent in the future; it is best to provide detailed steps. In addition, advise the customers on how to update their contact information. Nancy Flynn recommends asking for two email addresses in the event an email is bounced.

Step 4: Hardware and software requirements. This is a significant step. Federal E-SIGN law requires a detailed disclosure about hardware, software, and technical requirements needed to access and retain e-records.

Step 5: Electronic proof. Customers must reasonably demonstrate that they can access electronic documents before they begin receiving e-statements. Flynn advises, “Make no assumptions about the customer’s technical know-how. Educate; do not confuse. Some will need you to talk to them step by step on how to demonstrate technical ability. Spell it out for them.”

Step 6: Post-consent disclosure. Your bank must disclose any post-consent revisions to hardware and software requirements for accessing and retraining electronic records. The system of affirmative consent starts over again with these changes.

Check out Nancy's page for her upcoming and on-demand webinars.