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Wednesday June 14 5:02 PM ET

U.S. House Approves Electronic Signature Measure

By Jeremy Pelofsky

WASHINGTON (Reuters) - A bill that gives electronic signatures and documents the same force in law as their paper counterparts won near unanimous approval in the U.S. House of Representatives on Wednesday.

Under the proposed law, consumers and businesses will be able to sign checks, complete loan applications and contract services all online in a further broadening of e-commerce.

``Today a consumer can apply for a mortgage or get a quote on life insurance policy (online) but when it comes time to close the deal, a consumer must physically sign the contract,'' said Rep. Thomas Bliley, a Virginia Republican.

 
``E-sign will allow the entire transaction to be done electronically and the transaction will have the same legal effect and enforceability as a paper contract,'' he said during floor debate.

The House voted 426-4 in favor of the measure which now goes to the Senate for consideration. President Clinton has said he will sign the bill.

Consumers will still have the choice to use electronic signatures, so long as they can reasonably demonstrate their ability to access the documents, or they can stay with the more traditional handwritten signature for signing legal documents.

``No consumer would be forced into using electronic signature if they would feel more comfortable using a handwritten or normal signature,'' said Rep. Peter Sessions, a Texas Republican.

The bill would still require the cancellation of critical services like power, water and gas to still come on paper to carry their full force.

That would also include court orders, eviction notices, cancellation of health or life insurance, product recalls and paperwork to accompany shipments of hazardous materials.

However, the average consumer won't likely be able to immediately go on the Internet and complete entire transactions as the software and other necessary technologies are not widely available yet, according to industry experts.

``Operational implementation will take a while,'' said Mario Houthooft, president and chief executive officer of VASCO Data Security International Inc. (NasdaqNM:VDSI - news), a firm that offers authentication solutions.

``The first people that will use it will be the businesses, primarily the financial industry,'' he said.

VASCO, serving more than 130 financial institutions in over 45 countries, sells so-called Digipass authentication devices to about four million users that can provide authentication as well as digital signatures.

Financial institutions will be able to seek certain exemptions from federal regulators from some of the consumer consent requirements under limited circumstances.

One consumer watchdog urged consumers to be wary when signing documents electronically.

``You should always be careful and cautious before you sign your name on the digital line,'' Frank Torres, legislative counsel for Consumers Union, said in a statement.

Once final approval is reached and Clinton signs the measure, the Electronic Signatures in Global and National Commerce Act would take effect Oct. 1, apart from the electronic record-keeping provisions.