Making E-Signatures Count

But you can ensure that a contract goes through smoothly. The online process should verify that both parties agreed on it and that the customer accepted the offer of a product or service. It also should confirm that the customer promised to keep up his end of the deal, such as paying for the product or service. Disputes over online contracts typically come in two forms: A customer denies the validity of the contract and claims his signature isn't on it, or he may repudiate the contract, arguing "that's not what I signed."

Not My John Hancock

So, how do you make a digital signature stick? Affixing an e-signature on the dotted line doesn't guarantee you can enforce it, but it does authenticate a document and identify the signer. It also obligates the signer to follow the terms of the contract--purchasing 2,000 widgets from your company for a specific price, for example--and reduces the chance that the signer will deny her signature and reject the terms of the contract.

The best way to avoid a customer disclaimer is to authenticate her during the transaction process. Ask the consumer questions, for example, about her identity, such as Social Security number, mother's maiden name and birthplace.

You can dig deeper with your questions to further ensure the authentication can't be challenged, but beware that too many questions can turn off an online customer, prompting her to terminate the transaction instead. If you use a questionnaire, you should have a privacy policy in place and accessible to the customer during the transaction. E-SIGN doesn't require this, but you could run afoul of other individual privacy and confidentiality laws such as GLBA (Gramm-Leach-Bliley Act) or HIPAA (Health Information Portability and Accountability Act).