SIGN HERE

	June 16, 2000
	Signing on the dotted line, online, and to Ray Suarez.

RAY SUAREZ: Can an electronic signature sent over the Internet have the same legal status as the scrawl we all do with pen and paper? Yes, it can, according to legislation passed today by the Senate, and previously by the House. And that means businesses and consumers could sign contracts online, including applying for a loan or closing a mortgage. The bill also allows businesses to send disclosures or notices, such as billing statements, to consumers via e-mail, and financial institutions such as banks or insurance companies to keep records like checks or copies of contracts in electronic rather than paper form. President Clinton has already said he'll sign the bill. To explain its implications, we're joined by Frank Torres, legislative counsel for Consumers Union, a consumer advocacy organization, and Scott Cooper, manager of technology policy for Hewlett-Packard, one of the companies that lobbied for this legislation. Well, Frank, let's start with you. What is an electronic signature? FRANK TORRES, Consumers Union: An electronic signature is simply an electronic form of your regular signature. But in the electronic form that means it's a code or some sort of signal that you'll send out over the Internet when you want to sign a document. RAY SUAREZ: How is this different from punching in a credit card number, something that millions of people are already doing to buy household items or plane tickets? FRANK TORRES: It's something similar to that. But a consumer will have to go out and actually obtain one of these digital certificates that they'll be able to use when they sign. It's more than just making a purchase now. It signing onto a mortgage contract, not just applying for the mortgage contract, but actually affixing essentially your John Hancock to it. RAY SUAREZ: Well, Scott Cooper, who was for this? And what will it allow that's so important that wasn't possible before this bill was signed? SCOTT COOPER, Hewlett- Packard: I think we won't know the answer to that for a couple years. I mean, there are some easy things that you can do now, as Frank said, that you couldn't do before -- that you can have contracts that you can download, perhaps even make changes on them, send them back to the company say this is what I will agree to. So you can empower consumers to do more than you could with a credit card in sort of an either/or kind of situation. So I think that we'll find a lot of uses where we now have either credit cards or you would have to go to a bank, you would have to go to an insurance company and actually physically undertake the settling of the contract. You can now do that on line. What I think is going to be very interesting, though, is what people may think about next week or the week after or two years from now about new ideas that work very well on line that we just didn't think about until we had actually the ability to do an electronic signature and electronic contracts. And that's going to be interesting. RAY SUAREZ: But for anyone who has ever signed a contract, there's a certain ritual about it, there are seals, sometimes a stamp from a notary public, witnesses to signatures. Are we now in the process of creating electronic forms of these things that will add that extra stamp of verifiability to it? SCOTT COOPER: I think we are. I think that you'll find a whole continuum of security, that at the high end when you're buying your home, you will have a lot of security, we'll have a lot of steps that you'll have to go through. If what you're doing is making a transaction with perhaps somebody you don't know but you, you know, it's of a minor amount of money, under $100, you may need a lot less security because of the price of the object. It doesn't really matter that much. So whether you need the version of the seal or the notary will depend on the product or the service, just as it does today. RAY SUAREZ: Frank Torres, did this bill have to undergo some change till it passed consumers' unions sniff test? FRANK TORRES: Absolutely. There are two different versions of the bill, one that passed out of the House and one that passed out of the Senate. And the debate really came when the two bills had to be reconciled. And one of the big questions was, how do we deal with consumers concerns about the fraud issue, or how do we address the consumers concerns if you've ever received an e-mail and had a tough time opening up the attachment? What happens if the important disclosure of the contract itself was sent to a consumer and it gets lost in the Internet ether, and the consumer either never receives it or has a difficult time opening it? And that's what a lot of people spend a lot of time trying to figure out. Senator Leahy and Widen and Senator McCain's office, as well as Congressman Bliley and Senator Sarbanes worked really hard to figure out how to address some of these concerns that consumer groups had. RAY SUAREZ: Will consumers who are taking advantage of these new services now made possible also have to take on a certain level of responsibility, a certain level of perhaps risk to save these things in forms that they can retrieve, to make sure that they can get it to hand when they need it? FRANK TORRES: Consumers need to exercise some caution. If you're not comfortable with being on line, if you have no idea what your hardware or software requirements are, hold off from doing these on line contracts -- and wait and see how they work and wait until you have a better understanding. If you agree to receive on line disclosures, keep a copy of it, either print it up or obtain a printed copy from whoever you're doing business with. So you've got a backup. Systems crash, you could lose what you have online if that's where you kept it. The last thing is to really keep a list of whom you've decided to do business with on line, because if you change your e-mail address, you've got the burden to notify that company of that particular change. Or if you're not getting disclosures, you need to have a resource, a list to rely on so that you can go back and get that type of information. RAY SUAREZ: Well, Scott Cooper, in the news in the last couple month have been attacks on databases owned by major commercial enterprises, worms that get into people's home computers coming in through e-mail that destroy data and -- in effect -- destroy property. Does this worry you as we embark on this new set of possibilities? SCOTT COOPER: Well, I think everything that Frank said is what consumers should do, they should be very careful of the data that they keep. The other side of that, the data that the banks or insurance companies will have, is not going to be nearly as susceptible to any kind of risk. They will have their data held in a very careful manner. So you always have that backup of information available to them -- just as the way that the IRS or Social Security or the government agencies keep most of that information already on line. So there's already that move from a paper world to a digital world going on as we speak. So I think there's a lot of precautions that you need to take. But I don't think it's any different than precautions you take in the paper world about making sure that you always have access to the data. RAY SUAREZ: Except that when I sign a piece of paper with someone I'm making a transaction with, I take a copy home, they may retain a copy for their records, but I have a pretty good idea of where the chain of possession leads the information on this document. I don't always have that pretty good idea in the electronic world. SCOTT COOPER: Well, that's why I think it's important that you do have, as Frank said, that you have an insurance that when you receive that information that you are sure that you got what you think you did, and maybe even print it. As a computer company that makes a lot of printer We're very happy that that may be part of the solution here. But the thing for so many people is that where is your VCR warranty, where is your insurance, your latest insurance version of your life insurance? A lot of people may not know readily what those answers are either. The fact that you have a place where you can go for those, even if you can't find your copy, that there will exist that other copy readily accessible to you as well, I think is a very important step we've take then this bill. So you can go back to the company -- you can get another copy of those bills that will be just the same as your original. RAY SUAREZ: What about privacy, Frank Torres? FRANK TORRES: Privacy is absolutely an issue. And this bill really doesn't address it. But eventually we'll need Congress to take a look at that issue. Consumers are very concerned about their privacy in the on- line environment especially. But in addition, there's some other things that I think still need to be addressed here. One is how do we resolve disputes that might arise - now that people are buying CD's and books on line, but now perhaps signing for mortgages and insurance products, how do we resolve some of those disputes and will any savings that come about from this efficiency that the Internet will create, will these savings actually be passed onto the consumer who decides to shop and get a mortgage on line? RAY SUAREZ: And should we worry about verifiability, that someone who is telling you they're contracting with you really is who they say they are? SCOTT COOPER: Just as if somebody came to your door or went to a mall or you did something on line or through a catalog, I think that those are still concerns that consumers need to have. I think, though, that with a system that you have of verifiability through that digital signature though, through the certification process, most of that can be addressed already. I think with the work of groups like the Consumers Union, the FTC, the Better Business Bureau, that problems that already exist in the real word will not go away in the digital world, but I think they're addressable. They're still part of a reasonable system of back and forth between consumers and businesses. RAY SUAREZ: Scott Cooper, Frank Torres, thanks a lot.