E-SIGN Act and Consumer Consent

Issue/Inquiry

If a consumer does not consent to receiving electronic records, in accordance with the Bank’s E-SIGN Disclosures and Consent form, would that prevent the Bank from having further electronic communication with the consumer or accepting such credit information as asset and credit-related documents, or would this only be regarding disclosures?

Response Detail

The Bank will not be prevented from communicating with a consumer electronically, if the consumer does not consent to receiving electronic disclosures, but in such case, records or disclosures sent electronically will not satisfy the requirements of the consumer protection regulations for providing written disclosures.

Response Summary

The Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”) provides that, for any transaction affecting interstate or foreign commerce, a signature, contract, or record pertaining to such transaction may not be denied legal effect solely because it is in electronic form. The E-SIGN Act covers all “electronic records,” where an “electronic record” is defined as “a contract or other record created, generated, sent, communicated, received, or stored by electronic means.” 15 U.S.C. §§7001(a),(c)(1);7006(4).

Consumer protection laws and regulations, such as Regulation Z, RESPA, and Regulation B, generally allow written disclosures to be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-SIGN Act. For example, sections 1026.17(a)(1) and 1026.31 of Regulation Z (which cover disclosures generally or those pertaining to home mortgage transactions), section 1002.14(a)(5) of Regulation B (which concerns the delivery of an appraisal), or section 1024.3 of RESPA, specifically allow disclosures to be made electronically, provided that they are compliant with the E-SIGN Act.

Under the E-SIGN Act, a consumer must consent to receiving electronic records in a prescribed manner, which includes:

• Obtaining the consumer’s consent to receive information electronically in a manner that demonstrates the ability of the consumer to receive information in the electronic form that will be used to transmit it
• Describing hardware and software requirements needed to access or return electronic records
• Applying the consent to identified categories of records that may be provided during the course of the relationship
• Informing the consumer of the right to withdraw consent to receiving disclosures or documentation electronically, and the consequences of withdrawing such consent
• Describing the procedures a consumer must follow to withdraw consent and update information for contacting the consumer electronically
• Informing the consumer how the consumer may nonetheless request a paper copy of a record and whether any fee will be charged for that copy. 15 U.S.C. §7001(b)(1)(C),(c)(1)(D).

Therefore, with respect to the consumer protection regulations, if a disclosure is required to be made in writing, the use of an electronic record satisfies that requirement if the Bank has complied with requirements of the E-SIGN Act. This means that, in regards to such disclosures, the Bank will need to demonstrate that it has obtained the consumer’s affirmative consent and provided the information required by the E-SIGN Act, such as by having the consumer electronically sign or acknowledge the Bank’s E-SIGN Consent and Disclosures form. If it has not provided such information or obtained such consent, then it will not be able to fulfill the disclosure requirements of the consumer protection regulations electronically.

If the Bank has not obtained the consumer’s consent, this would not prevent the Bank from communicating with the consumer electronically or receiving information in that manner, but will limit the effect given to some communications.

This entry was posted on Monday, December 11th, 2017 at 6:00 am.