Among dot-coms hawking e-commerce solutions, no one is mourning the signature's swan song. According to June Felix, chairman and CEO of CertCo (www.certco.com), a provider of online risk management services, the law "really opens the e-commerce space. To have something that's now enforceable and uniform, it's a great help."

The law defines an electronic signature as "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record."

By granting electronic signatures the legal weight of ink on paper, the law promises to banish lingering doubts about the validity of online deals. Russell Stern, CEO of payment service provider Escrow.com, says, "All of the technology has been built— e-procurement and exchange models, finance facility and logistics management, but there's been no way to settle, no way to manage the transaction."

The Electronic Signatures Act does not endorse any particular technology, nor does it specify that e-signatures must meet the requirements recommended by the American Bar Association that make a handwritten signature legally enforceable. For example, an e-signature that could be affixed to a document without the owner's presence would be, against the advice of the bar association, allowed under the law. While the bar association's criteria are addressed to some degree in previously adopted state e-signature laws, the new federal law may invalidate portions of state laws where, as in Utah, specific technologies are required.

Celebration Time

E-signature boosters envision a boom in business-to-business transactions, with government and corporate buying orgies ensuing now that companies can avoid expensive paper overhead. Among the supposed predictors of economic exhilaration is a Forrester Research estimate that B2B Internet commerce in the United States will grow from $406.2 billion this year to $2.7 trillion by 2004. (However, IDC aims significantly lower, estimating $1.2 trillion four years hence.) Business-to-consumer transactions are likewise expected to grow, with e-signatures fueling everything online from credit card purchases to home buying.

  The same day the bill was signed, application service provider Red Gorilla (www.redgorilla.com) sponsored a San Francisco media event where partisan panelists spoke with dot-com optimism. "Digital signatures are to e-commerce what automatic phone switches were to the telecommunications industry," proclaimed Henrik Johansson, founder of online credit marketplace Creditland (www.creditland.com).

Given that the law merely sanctions electronic signatures and leaves the specifics of implementation to the market, this type of enthusiasm smacks of self-congratulation for a journey barely begun. California Attorney General Bill Lockyer even touted the environmental benefits of the law, saying "One of the wonderful results of your enterprise 'developing e-signature systems' is we're going to save a lot of forests."

To be fair, some crowing may be deserved. Ken Davis, information and computer security coordinator for Williams Communications (www.williamscommunications.com), says his company has saved more than $1 million by streamlining paper- dependent processes during the 10 months since deploying the Silanis Technology (www.silanis.com) Ap prove It e-signature application.

Rain on the Parade

Of the concerns raised that afternoon—security and privacy—the message was upbeat. Dismissing the suggestion that digital signatures might facilitate fraud, Gilman Louie, CEO of In-Q-Tel (www.in-q-tel.com), a venture capital firm chartered by the CIA to develop technology for the agency, said, "The concept that paper is inherently safer than the digital medium is misplaced."

Margot Saunders, managing attorney at the National Consumer Law Center in Washington, argues otherwise: "In the 22 years I've been practicing law, I've never had a case where I've had a piece of paper for a client, I bring it to court, and the defense of the industry is forgery."

Lockyer appeared more in tune with the worried. "The keepers of data too often have become peepers and reapers," he said. "And we need to have secure commerce, and consumer confidence, to address that issue very, very squarely." But he offered no hint as to how such security or confidence would be achieved.

Meanwhile, public fear is mounting. Testifying before a Senate judiciary subcommittee in July, Jodie Bernstein, director of the Federal Trade Commission's Bureau of Consumer Protection, said, "The fear of identity theft has gripped the public as few consumer issues have," and, after detailing some of the FTC's consumer outreach successes, acknowledged that "much remains to be done."

Saunders puts it less charitably. "There are considerable problems with this law," she says. "For one, there are no security requirements. . . . So we're expecting identity theft to really skyrocket. Another problem is that there's nothing in this law, or even in the state laws, that adequately requires that electronic records have the same degree of integrity a piece of paper has." In one possible scenario, she envisions a consumer coerced into buying a car in an online transaction to avoid a hefty paper document surcharge, then finding that the terms of the agreement have been changed by the dealer.

Frank Torres, legislative counsel for Consumers Union, warns, "It's up to the industry to assure consumers the process is safe." With such serious issues unresolved, hold onto your pens—it's going to be a bumpy ride.