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ESIGN Act: The Electronic Signatures in Global and National Commerce Act.
Learn about the ESIGN Act and tips for electronic records compliance.
- The ESIGN Act is a federal law that regulates signatures in electronic formats.
- The law provides consumer protection to anyone doing business online in the US or its territories.
- To comply, organizations have to preserve records and make sure signers know their signature is binding.
Be sure to review more information on ESIGN Act, which is available as a part of our Legality Kit here.
What is the ESIGN Act?
From contracts to court documents, the ability to sign paperwork digitally is what helps make much of the modern economy possible. Online commerce and widespread use of electronic records are only feasible because people and organizations can sign official documents without picking up a pen — made possible, in part, by the ESIGN Act.
The Electronic Signatures in Global and National Commerce Act (ESIGN Act) is a U.S. federal law enacted on June 30, 2000, to promote the use of electronic records and signatures in both interstate and international business transactions. Its primary purpose is to ensure that electronically signed agreements hold the same legal weight as those signed on paper. Signed into law by President Bill Clinton, the act officially took effect on October 1, 2000.
While individual states have their own regulations regarding electronic signatures, the ESIGN Act provides a unified federal standard, particularly for transactions that cross state or national borders. The law explicitly states that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” This fundamental principle guarantees that electronic agreements are legally binding and subject to the same level of verification and authenticity as traditional paper contracts.
A brief history of e-signature laws.
During the dot-com boom of the late 1990s, the explosion of e-commerce brought about a patchwork of state electronic signature laws attempting to regulate the enforceability of signatures on electronic contracts and other documents. The resulting hodgepodge of inconsistent rules made online interstate commerce difficult, and some states began signing on to a set of standardized regulations under the Uniform Commercial Code known as the Uniform Electronic Transaction Act (UETA).
The burgeoning tech industry pushed Congress to enact a federal law to govern electronic signatures in all 50 states. And that's how the Electronic Signatures in Global and National Commerce Act was signed into law. Cleverly abbreviated as the ESIGN Act, it set the standard for collection, authentication, and enforcement of signatures on electronic forms and documents.
What are the major provisions of the ESIGN Act?
The ESIGN Act establishes crucial guidelines for the use of electronic records and signatures, ensuring their legal validity in business and financial transactions. To protect consumers and maintain transparency, the law includes several key provisions that businesses must follow when conducting electronic transactions. These provisions cover consumer disclosures, record retention, and regulatory actions:
1 Consumer disclosures. Before a consumer agrees to receive electronic records, businesses must provide a clear and detailed disclosure outlining their rights. This includes informing the consumer of their option to receive paper copies, the ability to withdraw consent without penalties, and whether their consent applies to a single transaction or multiple records over time. Additionally, companies must explain how consumers can update their contact details or request paper copies, including any associated fees. Businesses must also disclose the necessary hardware and software requirements for accessing electronic records and notify consumers of any changes that could impact their ability to retrieve these documents. To ensure accessibility, consumers must confirm their consent in a way that demonstrates they can view the records in the required electronic format.
2 Record retention. The ESIGN Act requires businesses, especially financial institutions, to securely maintain electronic records in a way that accurately reflects the original contracts, notices, or disclosures. These records must remain accessible to authorized individuals for the legally required duration and must be stored in a format that allows accurate reproduction if needed. Agreements made before October 1, 2000, are exempt from these regulations, but any electronic agreements entered into after this date must comply with the updated consumer consent requirements.
3 Regulatory actions. Although the ESIGN Act became effective on October 1, 2000, without requiring additional regulations, the Federal Reserve Board later introduced rules to standardize electronic disclosures for various consumer protection laws. These rules, finalized in 2007, outlined when and how electronic disclosures should be provided, particularly for regulations related to lending, leasing, fund transfers, and consumer savings. The guidelines ensured that electronic disclosures were delivered in a timely and accessible manner, especially when consumers used online services to open accounts or request financial services. Compliance with these standards became mandatory on October 1, 2008, helping to establish consistency in electronic record-keeping and disclosure practices.
How can businesses comply with the ESIGN Act?
Electronic signatures have to meet a few basic conditions to be in compliance with the ESIGN Act:
Intent to sign
E-signatures are valid only if both parties show clear intent to sign the document. This can be achieved by having signers type their signature, click on a distinctly marked Accept button, or draw their signature using a mouse or stylus.
Consumer consent
Consent provisions in the ESIGN Act mandate that both parties must agree to conduct business electronically.
Signature attributio
An e-signature must be clearly affiliated with the person who has signed the document.
Audit trail
In order to prove that an e-signature is connected to the signed document, a party must be able to provide information about the transaction if requested. This includes signer details, a date and time stamp of when the transaction took place, geolocation and IP address, and documentation of the authentication process.
Record retention and consumer disclosure
The ESIGN Act mandates that consumers be provided with a “clear and conspicuous statement” informing them of their right to receive a copy of the record of their transaction in a non-electronic form. These records must accurately reflect the original document, be accessible to both parties, and be available for later reference either online or as paper documents.
How Adobe Acrobat for business can help.
Acrobat has a full suite of functionalities to help you make sure the e-signatures you gather comply with both federal and state law.
Owing to its enterprise-level security features including password protection and encryption, you can configure Acrobat Solutions so that you can meet a wide variety of federal document security compliance requirements. This includes HIPAA, FERPA, GLBA, and the Food and Drug Administration’s Title 21 CFR Part 11, which regulates electronic signatures for the medical and biotech industry.
Whether you’re trying to run a small business online or conduct legal proceedings remotely, knowing you comply with e-signature laws allows you to focus on your work without worrying about the fine print.
See how Adobe Acrobat simplifies signatures
For more information on this and other important topics, please visit the Adobe Trust Center.
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