EQUIFAX & OLSWANG DEMYSTIFY ELECTRONIC SIGNATURES
As Equifax SecureMark helps make online lending secure
17th November 2006 — Changes to the Consumer Credit Act mean that handwritten signatures are no longer necessary as a means of signing credit applications. Electronic signatures can be used to sign agreements online, providing lenders with a new and immediate channel for acquiring customers, as well as the opportunity to significantly improve customer service as more and more consumers expect instant access to products and services.
However, lending online brings with it some risks, particularly with regard to security, identity authentication and fraud. Equifax, the leading ID verification service provider, is therefore providing its SecureMark digital certificates for use when electronically signing credit applications in order to protect lenders from the risks of lending online and to increase consumer confidence in transacting via the Internet.
Equifax recognises that currently there is some confusion about how and where electronic signatures can be used, their legal standing and the advantages they can bring to online transactions. To answer these questions and dispel some myths, Equifax has worked with Olswang, the legal specialists in e-business, to provide the financial services industry with an insight into electronic signatures.
Neil Munroe, External Affairs Director, Equifax Plc said "As more consumers expect to be able to access services via the Internet, lenders are eager to offer loans online, but are wary of the risks and unsure of how and when electronic signatures can be used. With this in mind, Equifax and Olswang have produced a guide to electronic signing for online lending which provides the industry with the facts, in order to help safely and securely provide customers with loans online. Answers to key questions are summarised below. "
What is the legal position?
Consumer credit agreements are regulated by the Consumer Credit Act 1974. Recent changes to this Act — the Consumer Credit Act 1974 (Electronic Communications) Order 2004 — mean that handwritten signatures are no longer required for regulated credit contracts and that consumer credit documentation (with some exceptions) can now be signed and sent electronically.
What are Electronic Signatures?
There are two types of electronic signatures offering different levels of security. Advanced signatures (sometimes referred to as 'certified electronic signatures') act as a kind of 'super-strength' electronic signature, which, where used, automatically discharge the obligations for evidence since they are deemed to authenticate the signatories and the data itself. This is because they provide secure qualified certification via regulated and supervised certificate providers which have to fulfil various detailed statutory obligations in order to issue such signatures. Equifax SecureMark digital certificates are regulated in this way.
Basic electronic signatures, on the other hand, depend on a kind of self-certification system under which the person using the signature has to give statements as to their authenticity. They are not technically secured via special encryption or independently verified by a regulated person so they do not offer the same level of assurance.
How can advanced electronic signatures prevent fraud?
There are two parts to the authentication of someone, whether in person or on the Internet; validation and verification. Validation is a process one uses to prove an identity exists, for example by checking the Electoral Roll, or checking customer lists to find that there is a Joe Bloggs at 5 Clearwood, Wiltshire. By this method, you know that this identity is not fictitious.
Verification is the process used to prove that the individual you are dealing with owns that validated identity. When dealing with consumers in person most companies require individuals to provide documents such as passports, driving licenses and utility bills to accomplish this, as well as running the validation checks.
Using SecureMark digital certificates for advanced electronic signatures provides both of these checks in one easy, consumer friendly step in order to give lenders the same comfort online as when dealing with customers face-to-face.
How can advanced electronic signatures be trusted?
To issue certificates for use with advanced electronic signatures, a company has to be accredited as a trust services (the term used for commercial security services) provider. Equifax is accredited by tScheme (a self-regulated, non-profit, industry led body set up in 2000 under the Electronic Communications Act (2000)). In tScheme's own words; "tScheme gives you confidence by independently assuring that the Trust Services you are using meet rigorous quality standards". tScheme recognises the need to have trust in e-commerce and the need for trust services that help defend against fraud and loss of privacy.
tScheme has been appointed by the Secretary of State to establish controls and standards over trust services such as Equifax's SecureMark. tScheme approves the trust services in order to provide confidence to those who use them. Accredited providers display the tScheme seal indicating that they operate to tScheme standards.
Equifax SecureMark is accredited as the UK's first and only trust service provider of authenticated certificates online.
What about speed and ease of use?
The challenge facing online lenders is that they need a security solution that offers the right level of protection without causing delays to their service. Customers turn to online providers for speed and convenience, so lenders need to maintain this unique offering in order to remain competitive. The benefits of advanced electronic signatures mean lenders gain a fast, effective means of authentication. Equifax's SecureMark digital certificates can be incorporated into the online registration process, making them a seamless part of a lender's existing systems.
Munroe concludes: "The development of SecureMark is part of Equifax's ongoing commitment to helping lenders and businesses operate best practice, while meeting the ever-changing demands of their customers. Online transactions are here to stay and with SecureMark businesses can minimise the risks and provide essential peace of mind to their customers."
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