WASHINGTON—Ahead of this week’s Senate Commerce, Science, and Transportation Committee markup of the E-SIGN Modernization Act of 2020 (S. 4159), NAFCU and CUNA each shared their support for the legislation.
As proposed, the legislation would 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.
"The E-SIGN Modernization Act of 2020 addresses a simple but important problem with the E-SIGN Act—it leads to federal law preferencing paper-based processes over equivalent digital options that are beneficial at times of disruption," wrote Brad Thaler, NAFCU's vice president of legislative affairs. "Members who request to engage digitally with credit unions through services, such as online banking, must jump through additional hoops that are not required when they choose paper-based processes delivered through arguably less-efficient methods, such as the mail."
In the letter, Thaler highlighted recent challenges exacerbated by the coronavirus pandemic, sharing that more than 90% of NAFCU member credit unions have noted challenges in getting documents signed while adhering to social distancing protocols.
CUNA’s Letter
Meanwhile, for its part, CUNA emphasized updates to the Act are needed.
“Because the E-SIGN Act was designed in the commercial Internet’s infancy, updates are needed to ensure efficient commerce over today’s much more mature and capable Internet,” the letter reads. “The E-Sign Act favors document delivery requirements on paper-based processes over the equivalent digital delivery methods. The necessity of this choice was debatable 20 years ago when nascent Internet standards could make receiving electronic documents more difficult than traditional paper-based delivery methods but is now outdated and even counterproductive when digital delivery methods are mature and reliable.
“We realize that some consumer groups will argue the E-SIGN Modernization Act will harm consumers, but this is not true. Disclosures required by law will still be provided to consumers with the substantive change being that outdated delivery requirements will be modernized,” the letter adds. “In the time of COVID, possible mail disruptions and the ubiquitous smartphone, mandating a particular delivery method is not necessary and possibly harmful to consumers. The true consumer harm is from the current laws barriers to consumer choosing electronic delivery, which is the safest and most efficient way to receive documents.”