With the Senate unanimously approving the Millennium Digital Commerce Act (MDCA) on June 20, 2000, the concept of digital signatures on the Internet being as legally binding as conventional pen-and-paper contracts stands a pen stroke away from becoming a reality. Unlike similar digital, or electronic, signature legislation that failed in Congress last November, the House has already passed their version of the MDCA and President Clinton has promised to sign the bill into law. Digital signature supporters have long held that the creation of such an item will revolutionize how business and legal transactions are completed in the global economy.

With the success of this proposed law, it will be possible for individuals to sign checks, apply for financial loans and enter contracts for services entirely online and be legally binding. It will also enable companies to digitally store all financial information rather than maintain voluminous paper records. Despite the purported advantages of digital signatures, the proposed bill requires that certain public and private dealings remain on paper, such as eviction notices, court orders and the cancellations of insurance and public utilities. Still, a number of consumer and privacy advocates are opposed to digital signatures and cautious of the future they will bring.

On One Hand...

Businesses today spend millions of dollars a year on expenses associated with contracts and other documents. They must pay for the printing, copying, express mailing, and storage of countless documents, and simple business transactions are slowed while contracts and mailed back and forth for the required signatures. Under the new digital signature law, businesses will save money by storing their archives online, rather than in expensive, difficult-to-maintain storage facilities.

Consumers benefit from the new legislation as well, as they will be able to open bank accounts, make stock transactions, and pay bills from their desks. This will save consumers the time and trouble of making trips to a bank or brokerage house just to sign a document in person.

On the Other Hand...

Just as your credit card number can be stolen off the Internet by anyone with a little hacker know-how, your digital signature would be vulnerable to fraud and theft. The new digital signature legislation fails to address privacy and security issues, but gives digital contracts the same force of law as traditional paper agreements. This means that someone could steal a person's digital signature, sign contracts or make other transactions with it, and it would be up to that person to prove his or her digital signature was used in a fraudulent manner. This would be very difficult to prove, and therefore it is risky for consumers to use digital signatures.

The new digital signature technology could also result in increased costs for consumers. Although the law stipulates that consumers must be given the choice between electronic and traditional contracts, it does not prohibit businesses from charging customers extra if they opt for a traditional contract. This is unfair to the two-thirds of Americans who do not have Internet access as well as to the countless others who are uncomfortable using computers.

• The House of Representatives passed the digital signature bill by a vote of 426 to 4.

• The Senate approved the digital signature bill by a vote of 87 to 0.

• The Electronic Signatures in Global and National Commerce Act is scheduled to go into effect October 1, 2000 if President Clinton signs the MDCA.

• Sen. Spencer Abraham, R-Mich., and House Commerce Committee Chairman Tom Bliley, R-Va., were instrumental in passing the digital signature legislation.

• In November 1999, HR 1714, which would have legalized digital signatures in government transactions, failed by a vote of 234 to 122 in the House.

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