Vol. 108 2024 No. 1 (Jan/Feb)

Compliance Connection: Electronic Signatures

Question: Our new bank online banking software allows new customers to click a box to open an account — is that sufficient to bind them to our account agreement under Indiana law, or do we need an actual digital signature?

Answer: Yes, allowing customers to click a box to open a new customer account creates an enforceable contract under Indiana law — you do not need an actual digital signature.

Under the Indiana Uniform Electronic Transactions Act,1 electronic signatures and electronic contracts are recognized and enforceable where the parties agree to conduct transactions electronically. Further, an electronic record, signature or contract cannot be denied legal effect because it is in electronic form. If a law requires a document to be executed with a signature, an electronic record will satisfy the signature requirement so long as it contains an electronic signature.

The UETA defines an electronic signature as “an electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”2 An electronic signature process is sufficient to fulfill this definition if it adequately documents the customer’s consent to conduct the transaction electronically, associates the customer’s signature with the customer and evidences the customer’s intent to create an agreement. Therefore, the practice of a customer clicking a box to agree to account terms and open an account would provide sufficient evidence that the applicant intended to bind themselves to their account agreement under Indiana law.

Other examples of electronic signatures used to document consent to conduct transactions electronically:

  • uploading a scanned image of your signature to an electronic document;
  • electronically signing a document by typing your name in a designated signature field; or
  • clicking an “I Agree” button on an electronic document to consent to the terms.

In contrast to the simplicity of those examples, a digital signature, which is a subset of electronic signatures, involves software encryption behind the scenes of the online banking software. In technical terms, a digital signature is an encrypted electronic identifier that provides origin authentication, data integrity protection and signatory non-repudiation. A common example readers may be familiar with is Adobe DocuSign, which authenticates parties’ signatures by providing trusted digital certificates to signers in real time.

This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation.

1. Ind. Code § 26-2-8
2. Ind. Code § 26-2-8-102(10)

Brett Ashton is chair of Krieg DeVault’s Financial Institutions Practice. He counsels a wide array of financial institutions on complex bank acquisitions, litigation defense and avoidance strategies, strategic planning, new product development, negotiation and defense of regulatory enforcement actions, and general regulatory compliance issues.

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Krieg DeVault, LLP is a Diamond Associate Member of the Indiana Bankers Association.