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Consumer Banking and Payments Law: 11.3.2.1 General

UETA section 5 explicitly applies only to transactions when both parties have agreed to conduct transactions by electronic means.147 E-Sign’s parallel requirement is implicit rather than explicit; the Act does not “require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party.”148

Consumer Banking and Payments Law: 11.3.2.6 Electronic Records Can Prove the Terms of the Contract

Some courts seem to be stretching the intent of the statute of frauds by looking at exchanges of emails between contracting parties to ascertain not only the terms of contracts, but also whether the parties intend to be bound by the emails.187 In some cases, even when it appears that a final, paper-written, formal agreement to be signed by all parties was contemplated, a binding contract has been found to exist from the language, tone, signatures, and terms included in the emailed negotiations between the part

Consumer Banking and Payments Law: 11.4.1 Reasons for Special Consumer Consent Requirements

The use of electronic records in consumer transactions raises concerns requiring special consumer protections. While some consumers regularly engage in electronic transactions, this cannot be said of all consumers. Access to the internet varies considerably based on the characteristics of the user’s household. The lower the income, the less likely the user is to have access to the internet.

Consumer Banking and Payments Law: 11.4.2 Special Consent As Prerequisite for Electronic Records Provided to Consumers

Under E-Sign, if a statute, regulation, or rule of law requires that information be provided to a consumer in writing, an electronic record can only be utilized if certain conditions are met.196 First, the consumer must affirmatively consent to such use and must not withdraw that consent.197

Prior to consenting, the consumer must be given a clear and conspicuous statement of the following:

Consumer Banking and Payments Law: 11.4.3 E-Sign Consent Must Reasonably Demonstrate Consumer’s Ability to Access the Electronic Information

E-Sign requires that the consumer consent electronically “in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information.”202 This means that consumers must demonstrate, not just affirm, that they have access to the equipment and programs necessary to receive, open, and read the relevant electronic documents.203

E-Sign’s legislative history states:

Consumer Banking and Payments Law: 11.4.4a Application of Consumer Consent Requirement to Truth in Lending Act Disclosures

Because most Truth in Lending Act (TILA) disclosures are required to be in writing,219 when the creditor provides TILA disclosures in an electronic format, compliance with E-Sign’s consent requirement is a necessary pre-requisite to TILA compliance.220 One exception is that TILA regulations allow for some disclosures of information made in mail or telephone orders to be delayed so long as the information

Consumer Banking and Payments Law: 11.4.5 Application of Consumer Consent Requirement to Authorization for Recurring EFTs

The Electronic Fund Transfer Act (EFTA) provides that recurring electronic funds transfers from a consumer’s account (called “preauthorized electronic funds transfers” or PEFTs) “may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made.”232 This does not require that the consumer’s consent be in writing.

Consumer Banking and Payments Law: 11.4.7 Consumer Withdrawal of Consent

E-Sign provides that the consumer can withdraw consent to receive electronic versions of records.264 The consumer’s withdrawal of consent does not affect the validity of electronic records provided to the consumer before the withdrawal of consent. Withdrawal of consent is effective within a reasonable time after receipt of the withdrawal.265

Consumer Banking and Payments Law: 11.4.8 New Consent When Business Changes Requirements to Access Information

E-Sign places an affirmative requirement on a business to obtain a new consent from the consumer when the business’s method of electronic transmission changes. If the business changes its hardware or software requirements for accessing or retaining its electronic records and creates a material risk that the consumer will not be able to access or retain those records in the future, the business has to inform the consumer and go through E-Sign’s consent procedures again.267

Consumer Banking and Payments Law: 11.4.9 Federal Agency Rulemaking Can Alter Consumer Consent Requirements

E-Sign provides that a federal (not a state) regulatory agency may exempt certain records from the special consumer consent requirements only if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk to consumers.334 This goes beyond the ability of a federal agency to interpret E-Sign in a way consistent with section 7001.335 This gives the federal agency authority to limit the consumer consent

Consumer Banking and Payments Law: 11.4.11 Practice Tips for Consumer Consent Issues

Failure to obtain E-Sign consent means that the written disclosures required by federal or state law were not properly provided. The consumer’s legal claim for this failure is not under E-Sign, but the law requiring those disclosures. For example, if a TILA disclosure is provided electronically and the consumer did not provide E-Sign consent for that electronic disclosure, the consumer’s remedy is under TILA.

Consumer Banking and Payments Law: 11.5.3 Does an Oral Record Qualify As an Electronic Record?

Whether a notice, disclosure, or other record can be provided orally depends on a number of factors, including whether the disclosure is made to a consumer, whether existing law requires the disclosure to be made in writing, and whether UETA or E-Sign applies.371 One rule is clear—if the record replaces a writing required to be provided to a consumer, E-Sign prohibits an oral record from qualifying as an electronic record.372 However, an oral record could qualify as an

Consumer Banking and Payments Law: 11.5.4.1 E-Sign and UETA Requirements

E-Sign states that nothing in the Act “affects the content or timing of any disclosure or other record required to be provided or made available to any consumer under any statute, regulation, or other rule of law.”374 More generally, it states that E-Sign does not limit or affect any legal requirement other than those requiring that records be written.375 The legislative history indicates that this language was intended to preserv

Consumer Banking and Payments Law: 11.5.4.2 Standards for Conspicuousness Requirements

A common legal requirement is that a disclosure be conspicuous, and an electronic disclosure meeting such a requirement must be conspicuous as well. This creates new challenges as to whether an electronic disclosure is in fact conspicuous when the disclosure is placed off the screen or placed on a separate page altogether.383 Can the seller require the consumer to click on a chain of links before reaching the disclosures?

Consumer Banking and Payments Law: 11.5.5.1 General

If a statute requires that information be delivered in a certain way, what restrictions are there as to the method of electronic delivery? If a statute specifies the exact method of delivery, such as certified mail with return receipt requested, must an electronic version of that information be delivered in the same fashion? And, assuming a method of delivery is allowed, how are disputes resolved when the consumer claims never to have received the information?