Joint Trades to Chair and Ranking Member: Inclusion of S. 4159, E-SIGN Modernization Act, in CARES 2.0

Hon. Mitch McConnell 
Majority Leader
United States Senate 
Washington, DC 20510

Hon. Charles E. Schumer
Democratic Leader
United States Senate
Washington, DC 20510

Hon. Roger Wicker
Chairman, Ranking Member,
Committee on Commerce, Science, and Technology 
United States Senate
Washington, DC 20510

Hon. Maria Cantwell
Committee on Commerce, Science, and Technology
United States Senate
Washington, DC 20510

Dear Majority Leader McConnell, Minority Leader Schumer, Chairman Wicker and Ranking Member Cantwell:

The undersigned organizations represent a diverse group of American financial institutions and technology companies. We support inclusion of the E-SIGN Modernization Act (S. 4159), sponsored by Sen. John Thune, in the forthcoming Phase IV economic relief package.

The COVID-19 crisis has disrupted the financial lives of Americans, leading record numbers to turn to digital channels in order to stay on top of their finances. However, outdated technical steps required by the federal Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”), which was enacted at the dawn of the Internet in 2000, have prevented some consumers from quickly availing themselves of options to keep their financial lives on track. The same obstacles are affecting the ability of regulated businesses to offer digital options. It is time to update the law.

The E-SIGN Modernization Act addresses a simple but important problem: federal law preferences paper-based processes over equivalent digital options that are beneficial at times of disruption. Consumers who request to engage digitally with companies 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.

Since the beginning of the current crisis, companies large and small have found compliance with the E-SIGN Act reasonable demonstration requirement (12 U.S.C. § 7001(c)(1)(C)(ii)) challenging. Financial institutions have faced hurdles to quickly implement loan modifications, transfer balances, complete service requests begun on paper or over the phone, or fulfill requests from displaced customers for access to digital services.

It was not supposed to be this way. Twenty years ago, the E-SIGN Act was signed into law at Independence Hall. At that event, attended by Congressional Republicans and Democrats instrumental in authoring the legislation, President Bill Clinton summed up the bipartisan consensus:

Individuals are not just buying and selling online, they’re gaining information that is empowering them as consumers and as citizens . . . [But] that potential is now being held back by old laws that were written ironically to protect the sanctity of contracts. Laws that require pen and ink signatures on paper contracts for them to be enforceable. In order to unleash the full potential of the digital economy, Vice President Gore and I unveiled three years ago our framework for global electronic commerce. In that document, we set out the principles we believe should shape the rules governing electronic contracts. We said that the rules should be simple and nonregulatory, that they should not favor one technology over another, and they should give individuals and organizations maximum freedom to form electronic contracts as they see fit.

Download the letter to read the full text.