[Congressional Record Volume 143, Number 157 (Sunday, November 9, 1997)]
[Extensions of Remarks]
[Pages E2292-E2293]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          ELECTRONIC FINANCIAL SERVICES EFFICIENCY ACT OF 1997

                                 ______
                                 

                         HON. RICHARD H. BAKER

                              of louisiana

                    in the house of representatives

                       Saturday, November 8, 1997

  Mr. BAKER. Mr. Speaker, today I am introducing the Electronic 
Financial Services Efficiency Act of 1997. This bill is designed to 
provide a uniform nationwide framework to encourage the use and 
validity of electronic authentication.
  New forms of electronic communication are being utilized as an 
alternative to paper-based documentation and correspondence. Computers 
are now routinely used to initiate and execute a substantial and 
growing number of personal, business, and financial transactions. As a 
result, the problem of authenticating the

[[Page E2293]]

identity and the signature of parties using computers has become a 
major concern. Unless a reliable alternative to written signatures is 
acknowledged, the promise of electronic commerce will not be fully 
realized.
  State legislatures have recognized this need. At the present time 30 
States have enacted or have introduced some form of digital 
authentication law. Unfortunately, these State statutes lack uniformity 
both in scope and application. Electronic communications and commerce 
take place on the Internet or elsewhere in cyberspace. Therefore, State 
boundaries have little relevance and conflicting State electronic 
authentication laws may ultimately inhibit the development of 
electronic commerce.
  The bill I am introducing today is designed to address the issue of 
conflicting and confusing developments under current and proposed State 
law. The purpose of the Electronic Financial Services Efficiency Act of 
1997 is threefold: First, to provide for the recognition of digital and 
other forms of authentication as an alternative to existing paper-based 
methods, second, to improve the efficiency and soundness of the 
Nation's capital markets and payment system, and third, to harmonize 
the practices, customs and uses applicable to electronic authentication 
on a uniform, nationwide basis.
  The first goal is accomplished by explicitly recognizing that all 
forms of electronic commerce that comport with specific, basic 
statutory standards shall have parity with written signatures. As a 
result, they will be considered valid for all communications with 
Federal agencies, U.S. Courts and other instrumentalities of the U.S. 
Government.
  In order to minimize confusion and encourage uniform national 
treatment, unless the laws of a State otherwise expressly provide, all 
forms of electronic authentication that comport with the Federal 
statutory standards shall have the same standing as written signatures 
for all legal purposes.
  The second goal is met by the establishment of the National 
Association of Certification Authorities [NACA]. Any person or group 
that wishes to provide electronic authentication services in the United 
States must be a registered NACA member. The NACA may admit any person 
or group to membership, provided they are licensed and provide 
electronic authentication services consistent with the standards set 
forth in this act.
  The third goal is met by the creation of an Electronic Authentication 
Standards Review Committee within the NACA. Overseen by the Secretary 
of the Treasury, the Standards Review Committee shall establish, 
develop, and refine criteria to be applied to new electronic 
authentication methods, consistent with the specific standards set 
forth in the Electronic Financial Services Efficiency Act of 1997.
  Recognizing that digital authentication will be used in retail 
transactions, this legislation requires that consumers be notified of 
the fact that an electronic communication or transaction has been 
digitally authenticated. Furthermore, the act states that any rights 
currently afforded to consumers in underlying transactions are not in 
any manner impaired or weakened. Additionally, the Standards Review 
Committee has the authority to address consumer protection by 
exercising its rulemaking and enforcement powers.
  Mr. Speaker, I believe that this legislation will authorize and 
validate the use of electronic authentication. It will also encourage 
innovation and stimulate competition in the design and use of reliable 
state-of-the-art digital technology.

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