Recently we’ve been bringing you news of a number of court cases around the use of electronic signatures. A Michigan appeals court recently passed down an interesting decision regarding an electronic signature used to sign an online life insurance beneficiary change form.
Essentially, the previous beneficiaries of an insurance policy (the insurance holder’s parents) claimed that the new beneficiary (the insurance holder’s wife) had fraudulently signed and changed the form for the insurance holder, who committed suicide months later. The former beneficiaries argued that there was no proof that their son had e-signed the change of beneficiary form, despite the preponderance of personal information required to sign the document online, and argued that according to Michigan law, the insurance company did not “show the efficacy of the security procedures” surrounding the signature process as was required by Michigan law:
Michigan UETA - M.C.L. § 450.839:
"(1) An electronic record or electronic signature is attributable to a person if it is the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.
(2) The effect of an electronic record or electronic signature attributed to a person under subsection (1) is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including any agreements of the parties, and otherwise as provided by law."
The Court instead held the insurance company could show the intent of the signer in a variety of ways, not only via “a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” Not only were there a number of authentication checks required to access the signature process, but the company was able to show that the insurance holder was “highly computer-literate,” had in fact made his spouse a beneficiary on a number of other policies and accounts at the same time, and that the insurance holder also would have been informed of the changes via email and regular mail.
This decision highlights what we’ve stipulated in other blog entries here: it’s important that a company implementing a digital signature solution can clearly show (1) how a user was authenticated (with stronger authentication providing stronger evidence) before signing documents online, (2) how the signatures were applied, and (3) the quality and integrity of every signature on the document(s). Process, technology, and non-repudiation features are critical to understand in any electronic signature service rollout—and it’s part of our DNA here at SIGNiX.