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Electronic signature solutions have revolutionized the landscape of document signing, making remote signing seamless. You no longer have to send papers back and forth to sign agreements. Implement the best electronic signing solution in your organization and expedite all signing procedures like a breeze. Additionally, e-signature solutions offer document translation features, essential for global businesses operating across multiple languages.
With the growing adoption of e-signatures, wet (handwritten) signatures are becoming less popular. But before completely nullifying the traditional approach, it’s crucial to identify the risks and limitations associated with electronic signatures.
Limitations of electronic signatures
Despite their numerous advantages, electronic signatures come with certain limitations. Let’s dive into the most prominent challenges of electronic signatures:
Legal validity
The primary restriction of electronic signatures is their legal validity. While most countries recognize them as legally viable and have special laws passed to validate their legality, many countries have differences among their various jurisdictions regarding their status. This creates confusion, especially in cases of cross-border transactions.
Some industries, like the finance and healthcare sectors, impose certain legal requirements concerning using e-signatures. These requirements are mandated to be fulfilled to make e-signatures valid and prevent financial penalties and legal disputes. If these requirements are not met, then in such cases, e-signatures are considered to be invalid and subject to legal penalties and disputes.
Technical issues
Known for its flexibility and convenience, electronic signature solutions are sometimes vulnerable to technical issues. As e-signature solutions depend on technology for functioning, it is susceptible to technical glitches, connectivity issues, system malfunctions, and other technical problems. Such problems can lead to workflow disruption, delay in signing processes, and also compromise the validity of signatures.
Electronic signature solutions are prone to cyber-attacks such as system hacking, malware infections, etc. In such cases, the e-signature solution is likely to get exploited leading to legal issues and financial losses.
Authentication issues
Electronic signatures can sometimes lead to authentication-related problems. Unlike conventional handwritten signatures, which are unique to each person, e-signatures are susceptible to being falsified or replicated in case of inadequate authentication measures. Such a situation can create doubts regarding the signer and cause legal disputes or other challenges.
Electronic signature solutions use authentication methods such as OTPs, passwords, biometrics, etc., to verify the signer’s identity. However, despite these measures, electronic signatures are still at risk of identity theft or hacking.
User Acceptance
While it is widely popular among the masses and adopted by many organizations, some users remain underconfident and skeptical about electronic signatures. The concerns about privacy, security, or unfamiliarity with the technology create this lack of trust while hindering adoption rates in certain demographics.
Most businesses opt for adequate training of staff and clients about the benefits and security of electronic signatures to create confidence among their users.
Document compatibility
Electronic signatures often face compatibility issues with certain document types. Various document types such as Word files, PDFs, etc., have different sets of requirements for e-signatures, while some electronic signature solutions do not support certain document types. This means that organizations working with different document types have to face certain challenges while selecting an electronic signature solution that is compatible with the document types they work with.
Legal limitations of electronic signatures
There is no denying the fact that the popularity of e-signatures has picked up great momentum in the past decade. This is because of its cost-effectiveness, convenience, and speedy nature concerning signing agreements and documents. However, there are certain legal implications associated with electronic signature solutions. Let us know more about them!
Validity and enforceability
The main legal implication concerning e-signatures is their validity and enforceability. An electronic signature is considered valid and enforceable in a jurisdiction if it meets a specific set of requirements set by the legal authority of that jurisdiction. These requirements may vary depending on circumstances, however, the most common factors are listed below:
- Identification of the signer- An e-signature must be directly associated and uniquely tied with the signer’s identity.
- Signing intent - The signer must have the intention to sign the document while signing.
- Consent to do business electronically - An electronic signature is valid only when the signer consents to conduct business electronically.
- Record retention - An e-signature must include a genuine record of the signing process, including the signer’s identity and the time/ date/ location of the day of signing.
While all these requirements are mandatory to be fulfilled to determine the validity and enforceability of the electronic signature, some industries may have different or stricter requirements for using electronic signatures. Common examples of industries with strict requirements are the finance and healthcare sectors.
Legal framework
You must understand the legal framework of electronic signatures before using them. Most countries have specific regulations and laws concerning their usage. Common examples are the Global and National Commerce Act (ESIGN) in the USA and the European Union Legislation which includes the eIDAS Regulation.
Regulations and laws are necessary for:
- A legal framework for using e-signatures
- Determining their status in different contexts
- Defining requirements for enforceability and validity
While using electronic signature solutions, users must adhere to all vital regulations and laws to foster legally valid and enforceable agreements signed electronically.
Security and authentication
As e-signatures function on technology and rely heavily on it, they need to be protected from any illicit modification or unwanted access. Passwords and biometrics are also prone to hacking, therefore a robust and dynamic authentication method is much needed to prevent such occurrences. In case, any unwarranted user gets access to the password or biometrics of the legal user, then it may result in legal disputes concerning enforceability.
Record keeping
Electronic signature solutions involve accurate audit trails that track all records of actions done on agreements. This is necessary to validate the legality and authenticity of documents, agreements, and contracts. You must maintain a record of the signing process, details of the signers, date and time of the signature, mode of authentication used, etc. to avoid legal contention. Recordkeeping laws and requirements vary based on the jurisdiction and industry to which the organization and signing parties belong.
Security risks of e-signatures
As technology is advancing day by day, solutions that depend on it are becoming highly susceptible to security risks. Electronic signature solutions also pose certain security risks and must be taken care of with the right measures. Let us learn about the security risks associated with electronic signature solutions!
Fraudulent signatures
Fraudulent signatures are the primary security risks that you need to keep away from while implementing electronic signature solutions. It is possible that malicious actors can exploit the system acquire access to a user’s digital signature and exploit the content or the system as a whole. It is also possible that a hacker can gain entry to an e-signature device without permission.
If you want to combat such risks then it is suggested to use strong authentication techniques, like OTPs, passwords, biometric data verification, etc., in the digital signing process. Also, implement access controls and encryption facilities to avoid exploitation and unauthorized access.
Malware attacks
Electronic signatures are also susceptible to malware attacks, like worms, viruses, trojans, etc., that infiltrate e-signature solutions and compromise the security of documents. These can cause signature theft, document modification, or unauthorized access to confidential data. If you want to keep such security risks at bay, install advanced antivirus software in your digital framework. Also implement cyber hygiene by avoiding clicking on suspicious links, websites, and emails and keeping all software updated.
Absence of encryption
Electronic signature solutions encrypt data to avoid hacking and exploitation of documents and signatures. Opt for incorporating strong encryption techniques such as RSA encryption or Advanced Encryption Standard (AES) to minimize the risk of hacker interception and unintended access to confidential documents.
Insufficient data privacy
Insufficient data privacy is yet another security risk associated with e-signatures. As electronic signature solutions collect and store crucial data such as names, addresses, other personal details of signers, etc., steps must be taken to ensure the security of such data. To amplify data privacy, e-signature software must adhere to data privacy laws and regulations like the General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA).
Human error
One of the primary risks of security linked to electronic signatures is human error. Human mistakes like clicking on phishing links or emails or sending documents to the wrong recipient can happen at any time. Also, certain intentional actions like sharing your e-signature with an unauthorized person can compromise the privacy of confidential data.
It is suggested that all users of electronic signature solutions in an organization must be given an adequate amount of training on using the e-signature system, the risks involved, and the best practices for using the system. Features like audit trails and access controls must be utilized to identify security breaches.
How to mitigate risks associated with e-signatures?
Let us explore the strategies that you can implement to mitigate the risks associated with electronic signatures!
Strong authentication techniques
Combat instances of fraudulent signatures with strong authentication measures. Opt for verifying user identity with passwords, multifactor authentication, 2FA, biometric data, etc. Multi-factor authentication requires users to provide multiple authentication factors adding up to the security of the electronic signature system. This makes it difficult for hackers to break through the system.
Deploy a highly robust system.
Use a cutting-edge robust electronic signature system like emSigner that has dynamic security features including encryption, audit trails, access controls, etc.
Encryption helps you to secure documents and e-signatures from unauthorized access and exploitation. Encryption makes confidential data unreadable from end to end making it inaccessible to malicious actors.
Access controls safeguard e-signatures and signed agreements from being compromised at any stage. Such controls allow only authorized users to view, edit, or delete the document and its content.
Audit trails offer a detailed record of all actions conducted on the document right from its creation to who viewed it, who signed it, who edited it, and so on. This adds additional security layers and aids organizations in detecting unscrupulous activities easily.
Train and educate users.
A prominent risk linked with e-signature systems is human error. An efficient mitigation method is providing awareness sessions and training users about the use of the signature system. Users must be trained about the best practices regarding using the system, authentication techniques, and identifying and avoiding suspicious emails and links.
Deploy privacy controls
Electronic signature systems prioritize data privacy. However, confidential data can be easily prone to compromise and hacking if adequate data privacy control methods are not implemented. Organizations collect and store personal data including names, addresses, signatures, etc., of users. To combat data privacy breaches, they must implement control systems such as encryption, access controls, data retention policies, etc. This ensures that all confidential personal information remains safe while adhering to data privacy laws.
Regular audits
Organizations should regularly audit their electronic signature systems to identify and tackle potential threats before illicit users exploit them. Regular security audits are a great way to review the system infrastructure to make it more secure and ensure its proper functioning.
Bottomline
E-signatures are a convenient, speedy, and cost-effective way of document signing, which is why they have gained vast acceptance in the last decade. The advancement of mobile devices, cloud computing, and IoT has further accelerated the growth of e-signature. Today, organizations can do cross-border transactions and facilitate the signing of documents from multiple locations by multiple individuals simultaneously with the help of e-signature solutions.
emSigner is the leading electronic signature solution that is adopted by leading companies for robust e-signing services. We offer high data security and efficient signing facilities while complying with legal policies. Our clients are impressed with our services and that is why they vouch for our services. If you want to know more about our e-signature services then contact us now!