Electronic signatures are the lifeblood of conducting global business. When someone lives states away or even in another country, being able to come to a written agreement and each add your signatures is crucial to keeping things running smoothly. But, many wonder if it’s safe to use e-signatures to conduct business. In short, yes, it is safe as long as a few precautions are taken.
People express concern over e-signatures with worries such as potential fraud from forged signatures, sensitive information falling into the hands of hackers and issues with regulatory compliance.
How Electronic Signatures Work
Traditionally, people used ink to sign documents – a wet signature. The drawback with a wet signature is that the person must either travel to the location or sign in front of a notary public and then mail the document. Getting everything secured, especially with multiple signers can take weeks as documents get mailed back and forth.
Electronic signatures make the process easy and more globally friendly. Markets and Markets reported that the global digital signature market was predicted to hit $34.8 billion by 2028, with an annual growth of 36.4% between 2023 and then.
Most companies use an online signing service to validate documents and prevent fraud. With tight requirements in place, it’s less likely someone will forge a signature.
Legal Validity
More and more industries now recognize e-signatures as valid. Electronic signatures have held up in court as legally binding documents in the United States and many other countries. Two laws, the Electronic Signatures in Global and National Commerce Act of 2000 and the Uniform Electronic Transactions Act state that e-signatures are the same legally as handwritten ones.
Some cultures prefer wet signatures so many companies have turned to hybrid signatures, where some documents are digitally signed and others require a wet signature. There are just as many security risks with wet signatures and digital ones. An inked document offers no digital tracking and can be forged or altered more easily.
Why Encryption Matters
As the digital signature market grows, hackers are more likely to try to extract sensitive details for nefarious purposes. Digital signature platforms embrace encryption to protect sensitive data and prevent unauthorized access by bad players. Providers embrace end-to-end encryption to keep personal details safe.
Cybersecurity professionals understand how easy it is for hackers to get into systems through a backdoor. No matter how many protections you put in place, a disgruntled former employee or skilled professional can still get into the systems and access data.
Some of the points at which they can steal personal information are stopped when the platform uses end-to-end encryption to keep the details safe. Even if the hacker accesses the file, they may not be able to read it.
Verifying Signer’s Identity
There are a number of ways to authenticate e-signatures and ensure they are from the person who is supposed to be signing them. While no method is 100% foolproof, using a few different methods reduces the likelihood of fraud.
For example, people can sign in with passwords, biometrics and two-factor authentication. If you’re concerned someone might try to alter the document after the fact, you can collect a timestamp that records when the document was signed and what it looked like at that moment. Such measures help prevent tampering.
Some agreements require only a quick signature without a lot of back and forth between parties. For more crucial contracts, you should probably have at least a telephone conversation with the person before they sign documents and personalize them to suit their needs and plan with your firm.
Consider Security First
Companies should first consider how secure the documents are and cybersecurity experts can add measures to prevent hacking attempts. Start with the platform where the document resides. A well-known, experienced provider will already have measures in place to ensure digital tracking, timestamps and safe login methods. They may team up with an identity firm to ensure the person signing the document is who they say they are.
Every company should have a comprehensive plan in place for what to do if the unimaginable happens and files are compromised. Damage control can be almost as crucial as prevention. A cyber kill chain may be just the process your company needs to keep all stakeholders safe.
Look for software that uses end-to-end encryption. Companies must also consider where they store documents if they download them from the service provider. Do they print them and store them in a file? Who has access to the filing room or cabinet? For electronic files, what are the measures to ensure a cybercriminal doesn’t access the documents?
E-Signatures Are Here to Stay
Despite some leaders’ reluctance to adopt digital contracts, the growth of the electronic document market continues to climb upward. Rather than running from the growing trend, it’s best to figure out how to make it work for you and your clients. Since e-documents are just as if not more secure than inked signatures, embracing the option could put you ahead of the competition in a tight market.
