The year-old Global and National Commerce Act, known as E-Sign, was further validated when the National Automated Clearing House (NACHA) amended its operating rules to permit electronic authorization of consumer ACH debits.
Under the new NACHA rule, any electronic signature that complies with E-Sign will also pass NACHA's requirements for "similarly authenticating" a consumer ACH debit authorization.
Previously, NACHA required written authentication and a valid signature for each consumer debit transaction. NACHA's E-Sign rule modifies the similarly authenticated standard by allowing electronic authorization, so long as it proves both the consumer's identity and his or her assent to the authorization. This requirement matches that of the Federal Reserve's Regulation E, which was recently amended to implement provisions of the E-Sign legislation.
NACHA's rule and the changes to Reg E are both effective Jan. 1, 2002.
The new rule clarifies the requirement for electronically signed ACH debit authorizations, which will provide greater confidence to consumers and companies, said Elliott McEntee, president and CEO of Herndon, Va.-based NACHA. "Technology is changing the way that consumers authorize ACH debits to pay bills or purchase goods and services."
Meanwhile, the Independent Community Bankers Association (ICBA) endorsed the Federal Reserve's interim rules on electronic disclosures, which went into effect March 30 and become mandatory on October 1. The new interim rules comply with E-Sign provisions requiring distributors of electronic disclosures to ensure that consumers both "reasonably demonstrate" their ability and "affirmatively consent" to receive electronic disclosures prior to entering into an electronic transaction.
The ICBA said that the meanings of the terms "affirmatively consent" and "reasonably demonstrate" were clear and required no further interpretation by the Fed. A bank's obligation of reasonable demonstration was met once the consumer assents to electronic delivery, the ICBA said in a letter to the Fed's Board of Governors.
The ICBA said that no further guidance from the Fed was necessary on withdrawal of the consumer's consent to receive electronic disclosures. "A documented request from the consumer requesting that electronic delivery cease in lieu of paper is self-explanatory."
IF the Fed chooses to provide guidance on the ability of a consumer to opt out of electronic delivery, the ICBA said, then it should address the rights of the bank to alter its pricing structures in instances "where electronic distribution of documents (e.g., statements, imaged check files, disclosures) affected pricing or resulted in a waiver of some or all fees."