A colleague and friend had a negative experience using e-signatures that he posted on LinkedIn and I thought it appropriate to share with your readers so they don't find themselves in the situation Art did.  As he points out, it is important to get it right!
From Arthur Fucetola
EDGEHILL CONTRACTING, LLC, President.; ECCO Safety Services, Owner
Electronic Signatures, Integrity and the Small Business.
     My Lesson.
    Electronic signatures play an important role in business and commerce. In today’s digital and electronic world many businesses rely on email and electronic transmissions of documents and contracts to be competitive and successful.
    In most cases we, as small businesses, accept an electronic signature as a confirmation of acceptance or approval from the signer. We expect the signer to have integrity and to honor his signature. After all, this is their “word”, their “hand shake”, a guarantee of sorts.
But what if the signer later states that “he did not authorize the use of his e-signature” or denies it is his signature? What is your response? Your legal rights?
    The ESIGN Act became federal law in 2000. This act establishes a federal safety net to insure that electronic contracts would be legal for interstate and global consumers. The ESIGN Act confirmed that electronic signatures have the same legal standing as pen-and-paper signatures, and a contract or record of transactions may not be denied legal effect or ruled unenforceable simply because it is in electronic form. The ESIGN Act is a federal act, which means it affects people who do business online in all 50 states.     There is also the Electronic Signatures and Records Act, which ensures that electronic signatures are just as legally binding as those written in pen and the Uniform Electronic Transactions Act (UETA) for contracts. Of course there are exceptions and criteria to follow. To be brief; an e-signed document may be legally valid but ruled inadmissible in court due to weaknesses in security, audit logs, or authentication. This is why it is critical that businesses select an e-signature solution that is highly reputable and meets the highest standards of technical integrity. E-signatures are not acceptable on court documents, legal actions, wills and several other actions. Look them up to be sure. Numerous court cases have fully supported the legal integrity of e-signatures.
    The keywords are “INTEGRITY and LEGAL”. Most business people have integrity. This is probably the most important trait for any person. As businesses we rely on a person’s integrity to honor their agreements and signature. But this is about the ‘integrity of the signature”. Unless we use the proper procedure or program the signature may not have “legal Integrity”.
    I recently received a “promissory note” from a group of individual business persons in return for providing them with monetary funding of their (group) venture into the oil brokering business. This was a ‘time of the essence’ agreement and I did not have the proper e-signature program in place. I accepted a quickly drafted promissory note that was electronically signed by all parties with homemade jpeg signatures. We have all done this at one time.. cut and paste our signatures using word or clip art.
    Apparently their oil venture failed and the individuals in this group now refuse to pay the note they e-signed and returned to me.
    When I requested payment, in April 2014, I received the following responses:
TW of Fla. Stated that “I will pay you when I receive money transfers..bla bla bla..” She will not honor her agreement to repay me but acknowledges her e-signature was on the note. Lacks personal integrity.
JH of CA, states that he did not authorize his signature on the note. He did acknowledge his participation in the note originally. I have an “addendum email” that he sent with his signature also. He denies an obligation to pay the note and will not honor his agreement to pay his potion of the note and states that he will deny signing it. He Lacks Personal and Business Integrity.
WB of FLA, was the originator of this request for financial help for the group. He promised to repay me personally in 10 days. That was 11 months ago. He refuses to respond at all to any request, in any form. He has a silver tongue and a black heart. He No integrity.
KM of NJ, who participated in the original request for a short term loan with William Borrero, recently stated in an email that he did not authorize his e-signature and that he knew that this was a bad deal. Their actions make them more culpable and less honorable than the others. Both lack personal integrity.
    So what are my options now?   Pay legal costs for a judgment?   Appeal to their integrity and honor? Set up a payment plan? Threaten something? I have tried most options. Sometimes all you can do is inform others to be aware of the cheats and scammers, suck up your losses and learn a lesson.
    The Lesson: You cannot rely on a person’s integrity alone when asking for an e-signature. For a ‘legal recourse’ you must receive an e-signature that has ‘Legal Integrity’. A person’s integrity can fluctuate with their current state of circumstances. An e-signature cannot fluctuate if it is digital recorded thru the proper digital platform.
    So, how do I obtain and authenticate an e-signature from another party?
How can we to authenticate documents, and e-signatures that are verifiable, admissible, and defensible, without overwhelming the parties involved? Finding and using a trusted e-signature software program will give you the legal ability for enforcement. Who will pay for this enforcement? We, as individuals or small businesses, cannot usually afford to sue, and judgments may never payout. But it is nice to have that option. Also, you may be requested to e-sign a document, so it is best to be familiar with the process. An example of a type of digital signature we have used include the “I Agree” buttons. The better digital programs can authenticate each actions with a digital stamp. A good e-signature program will do the same. Think of this as an electronic Notary.
    It is important to remember that not all electronic signatures are weighed equally in the eyes of the law, and an e-signature that cannot be verified for integrity and security is going to be less defensible in court.
    Digital signatures are an excellent tool that businesses and consumers can use to authenticate contracts that are signed electronically. By most definitions, a digital signature is similar to a rubber stamp – with the main difference being its digital nature and the fact that certain bits of unique personal data must be hidden within the digital stamp to ensure its security and verifiability. For less than $20 per month sites like RightSignature.com or Docusign.com can collect and provide verifiable digital e-signatures for you and your business.
    Bottom line: If you are willing to accept a homemade E-signature or a ‘free sign’ app, like I did, then you may be cheated, as I was. There is no defense when you deal with a person that will not honor their word or lacks integrity.
    If you or your business would like to use and receive e-signatures, then use an E-signature software program. A good program should provide you with signature authentications, verifications and should prevent unauthorized use of your e-signature (forgery) and changes to your documents. Unfortunately, you may have to still pay to sue the unscrupulous. But, a judgment in your favor is more likely and possibly less costly with a verifiable e-signature and contract.
    Add this to the cost of doing business.. with integrity.
Best regards,
Bob Shoremount
Strandberg Consulting Group
Consulting - Business Development - Process Improvement - Acquisitions - Exit Strategies
    Thanks for passing that along Bob.  Your buddy should have learned another valuable lesson - use an attorney who knows what he's doing.  Why would this guy do a note, lend money and now complain he might have to hire an attorney. 
    Electronic contracts are an evolving issue for the alarm industry and I am going to have much more to contribute on that topic.  Suffice it to say I am not going to be recommending that you rely on "integrity" when getting the contracts signed.
    I always enjoy reading your newsletters in my email every day.  I can usually pick up a nugget or two.  I have a question I don’t remember seeing the answer to.  One of my long term clients is a condominium association.  We have a service contract ( your Standard Commercial All-In-One ) with them for their access control and CCTV systems.  We have a copy of the minutes where the contract was approved.  There is a new manager, part-time no less, in place that doesn’t understand why they have to pay this contract.  I have gone over it several times with them.  As of now she is holding up all payments which are several thousand dollars at this point.  I left several emails and voicemails which have to this point gone unanswered.  This association has been a client of mine since about 1995 and has gone thru many managerial changes.  This situation is a first.  How would you recommend I handle this.  Would a letter from you help to bring their account up to date?  Please keep this confidential if posted in the newsletter.
    Here was my suggested response:
Dear Confidential:
    You should send the letter I am below for you.  If they don't release the funds and continue paying you should sue them in arbitration, which my office can handle for you.  You should definitely copy the board members who approved the agreement.
Dear ......
    Security Service has a written agreement with the Condo Board and we have never had any complaints regarding our service, and we have never had any problems with getting paid, until now.  For reasons that have not been adequately explained to me you have taken the position that you can withhold payment and refuse the honor the terms of the agreement.  
    Security Service prides itself on its customer relations and its excellent service reputation.  We expect the Board to honor its contractual commitment, just as Security Service has to date.  The agreement is quite specific regarding the Board's payment obligations and the consequences of non payment.  We prefer to maintain good relations but must insist on payment of all arrears and on time payments in the future.
    The Board presently owes $____        for the following period:     ......  Unless payment is received no later than March 13, 2015 we will declare the Board to be in default.  I hope I hear from you.

                                                Very truly yours,
cc:  Board members