March 16, 2001
Dear Sir or Madam:
E*TRADE Bank, a federal savings bank located in Arlington, Virginia, is pleased to submit the following comments to the Federal Trade Commission and the National Telecommunications and Information Administration regarding the consumer consent provisions of the Electronic Signatures in Global and National Commerce Act ("ESIGN" or the "Act")(1) set forth in Section 10(c)(1)(C)(ii) of the Act.
E*TRADE Bank is wholly owned thrift subsidiary of E*TRADE Group, Inc., a global leader in online personal financial services. The Bank is the largest internet bank in the U.S., with over $11 billion in assets, $6 billion in deposits, and 362,000 customer accounts. The Bank has achieved the number one position in online retail banking by leveraging technology to deliver superior value to its national customer base through innovative products and the highest levels of service. As such, the Bank has a different and somewhat unique business perspective with respect to consumers' use of electronic records and the consent requirements in ESIGN.
E*TRADE Bank strongly supports the notion of consumer consent incorporated into Section 10(c)(1)(C)(ii) of the Act. In the Bank's view, doing what the customer wants is simply a matter of common sense and good business practice. If one of the Bank's customers prefers to receive monthly statements and other notices in written form through the mail, then it is clearly in the Bank's best interests to abide by and honor that preference.
Although the Bank does not operate a traditional network of brick and mortar branches, it does provide a variety of "touchpoints" through which customers can open accounts, communicate with it, and conduct banking transactions. For example, individuals who desire to open accounts with the Bank can either go online, call a toll-free number or send in a written application and an initial deposit by mail. The Bank's customers can also withdraw funds from their accounts at over 9,000 ATMs operated by its affiliate E*TRADE Access, as well as many other ATMs that are part of the Cirrus network. The flexibility and convenience that E*TRADE Bank is able to offer individuals who bank with it is one of the key contributors to the strong growth of the Bank's customer base over the past year and its success in competing against other online banks.
Just as the Bank's customers are able to choose how they transact business and communicate with the Bank, they should also be able to choose how the Bank communicates with them. A number of the Bank's customers prefer not to be bothered with written monthly statements and notices and elect to view their accounts and bank online. Others still want to receive their statements and other communications on paper. The customer's preference should dictate how and in what form the information is sent. Accordingly, E*TRADE Bank fully agrees that consumers should only receive information by electronic means if they consent to that particular delivery method.
However, the Bank does not believe that the provisions in ESIGN that detail the specifics of how a consumer's consent must be obtained are either necessary or desirable. As set forth in clause (ii), in order for a consumer consent to be effective, (1) the consumer must consent electronically or confirm his or her consent electronically, and (2) the form of the consent must "reasonably demonstrate" the consumer's ability to access the information sent.
The Bank understands the concerns expressed by some that the above two elements of the consent requirement in ESIGN are necessary to protect consumers who are not able to or interested in obtaining information by an electronic means. But common sense dictates that the vast majority of businesses dealing with consumers will take whatever steps that they reasonably deem necessary to make sure that a consumer (1) has given his or her knowing and informed consent and (2) has the ability to receive communications electronically. An entity that sends information electronically runs the twin risks of losing a customer and/or violating consumer protection laws requiring delivery of notices if the customer has not consented to or is unable to receive electronic communications. Senders of information such as the Bank will therefore have a very strong incentive to adhere to consumers' wishes and make sure that its communications are being received in a readable/understandable format.
In addition, E*TRADE Bank is concerned that the electronic consent and "reasonably demonstrates" components of the consumer consent provision will add an additional layer of communication exchanges that would be irksome and cumbersome to consumers. Take the case, for example, of an individual who opens an account with the Bank using an application form printed in a newspaper or magazine. On the form, the individual would be asked to provide his or her e-mail address and would be asked to check a box if he or she wanted to receive notifications electronically and view statements online. Before the Bank could start sending information electronically to the customer, it would have to, at a minimum, send an e-mail and obtain a response back from him or her. While this can be a simple process, it could easily be interpreted as the Bank needlessly "second guessing" the customer's statement on the application form that he or she is able to receive communications electronically. There is also the possibility that the customer, for whatever reason, does not check his or her e-mail regularly, and it could be some period of time before the Bank receives a confirming response back from that person.
At least one other commenter has noted the concern that computer software, etc. may be incompatible such that the possibility exists that an e-mail will be unreadable by the recipient, or that a consumer's browser will not allow the person to access a web site where electronic information can be viewed. While this may have been a legitimate concern in the past, and the problem still exists to some degree when files or documents are sent as attachments to e-mails, the Bank does not believe that the issue rises to the level where it needed to be addressed in the Act. Also, the Bank would not send its customers an electronic copy of their statement by e-mail, but instead would simply send an e-mail notifying customers of their ability to view their statements by logging-in to a secure environment over the World Wide Web. As noted previously, it would be in the interest of the institution providing the statement on-line to make sure that the materials could be viewed on standard software and hardware. As long as the consumer has the means to change his or her preference for electronic over paper if any problem should arise, it should not prove necessary to require specific notification of software or hardware requirements in advance.
In sum, E*TRADE Bank believes that it should be the consumer's decision whether or not to receive statements, required notices and other information electronically. However, the Bank is of the view that the process of how a consumer's consent is obtained is best left to the parties involved in the communication.
Again, E*TRADE Bank appreciates this opportunity to offer its comments on the consumer consent provisions in Section 101(c)(1)(C)(ii) of ESIGN.
Very truly yours,
John A. Buchman
1. Pub. L. No. 106-229, 114 Stat. 464 (2000).