Savvy Lawyers Serving California Clients
E-signatures are an increasingly common part of business practices throughout the United States. Rather than requiring a customer to be physically present in an office in order to sign a paper contract, e-signatures allow consumers to review and sign contracts from the comfort of their own home, without the pressure of a sales person sitting in front of them.
E-signatures have generally been viewed as a step toward giving consumers greater ownership over their purchases. People also see them as improving efficiency and increasing the rate of successful contracts completed for sellers. However, they are not without controversy and limitation.
If you are an automotive company or dealership operating in California, for instance, it is important to know that e-signatures are not allowed for new or used car sales. This is likely different from many of the other states you may operate in. Using e-signatures in California may result in lawsuits or an investigation against your company.
The Legality of E-Signatures Throughout the United States and In Rancho Cucamonga
In the early 2000s, the United States passed a law permitting electronic signatures on contracts, known as the Electronic Signatures in Global and National Commerce Act. Under the law, businesses and retailers may sell products to consumers – including products with loans, such as cars – as long as the electronic contracts continue to abide by Truth in Lending Act requirements, including a full disclosure of necessary terms.
California, likewise, has their own state law governing electronic transactions known as the California Uniform Electronic Transactions Act (UETA). Currently, the CUETA allows e-signatures contracts, but carves out several important exceptions meant to protect consumers.
For the auto industry, one of those exceptions is very important: electronic signatures may not be used on new or used auto sales or lease contracts. California is the only state in the nation that prohibits e-signatures on auto contracts, which means that dealerships and car companies must be wary of using standard forms and practices in California.
The Concern for E-signatures in California
While California does not dispute that e-signatures improve efficiency for consumers and for retailers, the state, and consumer groups, have been concerned that the use of e-signatures increases the potential for abuse. The thought here is that e-signatures makes it easier for consumers to overlook the finer details of their contract. This, of course, leads to buyers finding out later that they have agreed to terms they were never previously informed of.
While auto industry representatives counter that these fears are not born out in reality, and that electronic contracts are as easy to read and understand as paper contracts, they have not yet had success in eliminating this exception.
Earlier this year a bill, AB 380, was introduced into the California legislature which attempted to remove the auto sales exception from the UETA – and give auto dealerships the option to offer e-signatures to consumers if they preferred. While the bill initially had strong legislative support, it was eventually abandoned after significant push back from consumer advocates and consumer groups.
California Attorneys Advising You On Technological Advances and Limitations
The e-commerce and e-signature arena is an area of constant evolution. New technologies continually seek to make the retail sales space more efficient for sellers and consumers, and safer for all parties involved.
With these changes come constant updates to regulations and legal protections for consumers, which require a watchful eye and continual review in order to ensure compliance. At CKB Vienna LLP, our attorneys consistently review new legislation and federal rules applicable to automotive companies, and work with industry representatives to stay on top of new trends and lingering concerns. For more information, contact us online or at 909-980-1040.