Call it a John Hancock hybrid.
Two years after the federal government legalized electronic signatures, many consumers are relying on mouse clicks and passwords rather than writing their names on a dotted line.
Barred by cost, the need for complex technology and third-party certification, few companies are using electronic versions of the traditional signature.
Those that do include grocery stores, banks and motor vehicles offices, places where individuals sign a pressure-sensitive signature pad.
For example, in August, Arizona became the first state to allow people to register to vote online. The resident fills out an application and provides personal identification. Once completed, the application is sent to the motor vehicles department with an individual's electronic signature. However, the online registration is limited to people who have visited motor vehicles offices since 1995 and used an electronic signature pad.
But the majority of businesses involved in this new technology are using the part of the federal law that defines electronic signatures as any sound, symbol or process that shows a person's intent to sign a document. Many say this approach is successful.
Take Quicken Loans, an online home mortgage company based in Livonia, Mich., launched its Click-To-Sign feature this month.
Customers click on a few arrows to sign off on an application for a loan.
The process, says Kevin McCallum, Quicken's systems architect, cuts days off of the application process for the loan provider and the customer.
Currently, Quicken must send an application by overnight mail or a customer must download the application and sign and mail it even though most of the document has been filled out online.
"It could take three to seven days to turn a loan application around," McCallum said. "Now they can complete their application faster, get a loan and close a week earlier. That can make a big difference when you get into a house earlier."
Online loan applicants must open each document, scroll to a yellow arrow alongside the signature line. Then they click on the yellow arrow, which changes from "Click to sign here" to "Signed."
Although no written signature is required, McCallum said the company has fulfilled the law by establishing a customer's intent to apply for a loan.
Electric-commerce experts say the passwords and mouse clicks are just as secure or, at times, better than collecting an ink signature. If a person wants to defraud an online agreement, he or she will have to hack into a computer system.
Student loan companies such as Sioux Falls, S.D.-based Wells Fargo Education Financial Services and Reston, Va.-based Sallie Mae use personal identification numbers as an e-signature for online applicants.
Dave Hawn, executive vice president of operations and information technology for Wells Fargo, said the e-signature was launched last year.
From January through July of this year, 14,000 people used Wells Fargo's e-signature feature.
"By this time next year, about 25 percent of our applications will be signed electronically," Hawn predicted. "We hear from schools that are promoting our e-sign process because it is so fast. We can tell schools right away when a student loan is good to go."
Stephen Tupper of Dykema Gossett PLLC, a Bloomfield Hills, Mich.-based law firm, said he is advising consumers and business clients to treat any agreement made over the Internet or through e-mail as legally binding.
Tupper points to two recent cases.
A Boston court recently refused a defendant's request to negate a contract for the sale of his house because he entered into the agreement by typing his name at the bottom - which was considered an electronic signature.
In Washington, D.C., a court decided in favor of a company, which had provided services under a click-through contract. The agreement asked customers to click accept or not accept on a document rather than providing a signature.
Electronic commerce experts say the widespread collection of electonic signatures probably won't happen for another five years, if at all.
To use a human signature, a company must hire a third party to certify that the signature is authentic. A company must also install software that creates what is known as a public key infrastructure. Each customer is issued a key that holds an encrypted block of data that creates a digital signature.
"Essentially, the technology is difficult to overcome, it's not cheap to deploy and it's complicated for customers," said David Thompson, senior research analyst with California-based META Group.
Tupper said he believes that in the future technology will skip over the graphic signature altogether.
"The graphic signature is something we understand from a prior technology - paper and ink," he said. "We need to understand that an electronic signature is a wide range of things. It could even be a voice recording."
Jeff Bennett writes for the Detroit Free Press. Contact him at 313-222-8769 or bennett@freepress.com.
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