ESIGN Act Flashcards
Credit unions can retain records in electronic format to satisfy federal record retention requirements if what conditions are met?
The records must accurately reflect the information in the original document, must be accessible, and must be capable of being accurately reproduced.
Record retention requirements can be satisfied with either an electronic image of an original hard copy or an electronic record of the information itself (such as information originated electronically).
What are the requirements of the consent process? When should new consent be obtained?
ESIGN requires the credit union to inform the member of the hardware and software requirements for access to and retention of electronic records, as well as the procedures for updating personal contact information, such as email addresses.
- If the hardware or software requirements change, such that there is a “material risk” that members will not be able to access the electronic information, the Act requires a credit union to disclose the new requirements and re-obtain the member’s affirmative consent.
The credit union is also required to inform the member about the availability of legally required disclosures in paper form, their right to request paper records and any fees that may be imposed for printing or delivery of paper copies. The disclosure must also establish the breadth and scope of the consent and whether it applies to only the particular transaction in question, to identified categories of records or to any records that are legally required to be made available throughout the course of the member and credit union’s relationship. Finally, ESIGN requires a credit union to inform the member of their right to withdraw consent at any time, the procedures for doing so, the consequences for doing so (including the loss of any incentives) and any associated fees.
Does consent or confirmation have to be provided electronically?
Yes. The member’s affirmative consent to electronic disclosures must be made electronically or confirmed electronically (using the member’s own equipment).
Does consent apply to one category of records or to all records or disclosures?
The credit union has latitude to include additional records beyond periodic statements in the member’s electronic consent so long as it properly discloses the categories of records which will be sent electronically.
What are some potential consequences of improper E-SIGN consent?
Timings for notifications on errors (fraud/disputes) or challenge change-in-terms notices if the member did not receive the notice.
The failure to obtain proper consent would not prevent a contract from being valid and enforceable. However, this does not give credit unions a “get out of jail free” card. The account may be valid, but the lack of proper disclosures could be in violation of the relevant regulation (Regulation E, Regulation Z, Truth in Savings, etc.).
