July 29, 2016

Electronic Signatures – Risks And Benefits Explained

Electronic Signatures

Is The Pen Mightier Than The Pixel? Electronic Signatures vs Traditional Paper

Ever wondered why checkboxes are so popular online? From ordering pizza to signing up to Spotify, we’re constantly asked to “agree to the terms and conditions”. Heck, one day, you’ll probably check a box to get married! We may not always think of these little boxes as electronic signatures, but they in fact operate in the same way as traditional paper contracts. Do you ever consider the risks and benefits when you sign documents online?

What is an electronic signature?

An electronic signature is very similar to a pen-and-ink signature. Essentially, it’s a mark or indication that identifies you, the person signing the document. Like a pen-and-ink signature, it’s used to show that you agree to a set of terms.

Electronic signatures come in all shapes and sizes, from an image of your real world signature, to email signatures, to clicking “I accept” to sign documents online. Courts in Australia consider all of these to be valid electronic signatures.

You can use an electronic signature in most situations where a pen-and-ink signature could be used. But there are some circumstances where you can’t use an electronic signature – for example: on your will, on a statutory declaration or affidavit and on other documents that have formal signature and witnessing requirements. Also, both parties to the contract must agree to accept the use of electronic signatures.

What are the benefits of using electronic signatures?

Electronic signatures are extremely useful for cutting down on waste. They remove the need for pens, paper and ink. They also protect against wrist injury for anyone required to sign reams of paperwork in one sitting.

Many businesses and government agencies are adopting and accepting online or electronic signatures as part of their contracting process. Rouse Lawyers is proud to use electronically-signed cost agreements, for example.

Electronic signatures are also practical: imagine having to physically sign terms and conditions every time you downloaded an app! Angry Birds would have more than a few angry customers.

What are the risks when you sign documents online?

Electronic signatures aren’t fool-proof. Forgery is still a very real risk. If someone gains access to your electronic signature, it could be used without your consent. Proving fraud or forgery in such circumstances can be especially tricky. Remember, electronic transactions spread further and faster than old-school paper, so once your security has been compromised, the damage can occur almost instantaneously.

If you use electronic signatures, you need to ensure that your electronic signature is properly secured. Use strong password protection and 2-factor authentication wherever possible. You wouldn’t leave your passport or driver’s licence unattended, so don’t leave your signature vulnerable. We recommend using a password manager like LastPass to protect your passwords.

The takeaway

Electronic signatures are as useful as you make them. They’re great time savers and much more environmentally friendly than their paper counterparts. However, if managed incorrectly, they can be a serious headache leading to identity theft, fraud or simply time wasting frustration.

For advice on how to implement electronic signatures securely and efficiently, talk to the Technology team at Rouse Lawyers. Contact us today!