Understanding eSignature compliance regulations

Electronic documents are a mundane yet integral part of the financial industry, as they improve operational efficiency, reduce costs and save paper for banks and credit unions. Members also enjoy the convenience they offer, as they are able to sign disclosures and send the document back from their mobile phone or computer. Electronic Signing is a key feature allowing members to agree to the terms of documents without a trip into their credit union’s branch. Electronic signatures carry the same legal weight as paper documents thanks to the Electronic Signatures in Global and National Commerce Act (ESIGN), which went into effect on October 1, 2000. For this reason, eSignature is the preferred method for both members and CUs alike for its convenience. However, there are particular rules and regulations regarding ESIGN to which credit unions must abide. Here are important compliance guidelines to keep in mind when implementing eSignature options.

Online Member Applications

As required by FCU model bylaws, applications for membership must be signed by the applicant. A handwritten signature is not mandated, meaning eSignature is an accepted and approved option according to these bylaws. However, the credit union needs to have audit and verification procedures in place in any document where a member’s signature is captured electronically. When using electronic signature, both the member and credit union need to understand that the action they’re taking is formalizing an agreement. While not required, an electronic signature-verification service like DocuSign will help to authenticate the signature and ensure both parties are aware that, upon signing the document, it becomes a binding agreement.


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