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Signing Up for E-Signatures

More Companies Are Using New Technology to Cut Costs -- and Fraud

By REBECCA BUCKMAN
July 3, 2007; Page A9

Seven years ago, after Congress validated "electronic signatures" in a new law, John Crowley tested the technology with an eye toward using it at his mortgage- and banking-services company. He quickly decided it wouldn't work.

The software for computerizing pen-and-ink signatures on contracts, mortgages and other important documents was too complicated for most people to use, said Mr. Crowley, now chief information officer of Fidelity National Financial Inc., a Jacksonville, Fla., surety and title-insurance company. The software involved multiple steps and high-tech "digital certificate" software that people had to download to their computers for extra security, he said.

A lot has changed. Today, small companies such as Seattle's DocuSign Inc., Sertifi Inc. of Chicago and EchoSign Inc. of Palo Alto, Calif., have launched Internet-based technology that makes signing contracts on a computer simpler and more user-friendly, often involving fewer clicks than buying a book or a pair of pants online. E-signature products also have gained legitimacy as they have withstood legal challenges, giving executives more confidence that contracts signed online are just as binding as pen-and-ink ones, said executives at companies that are using the technology now.

[E-Signatures]

It all convinced Mr. Crowley to give e-signatures another try. In a few weeks, Fidelity National will start using e-signatures in a pilot with a major mortgage lender. The lender will let people refinancing their mortgages sign a power-of-attorney document online with DocuSign, speeding up the process and possibly cutting paper and postage costs. Mr. Crowley also hopes the effort will help his company to reduce mortgage fraud, since people who use it have to answer multiple security questions before they are allowed to view and sign the documents online.

"To the extent [these] technologies can help us take [fraud] out of the mix, we are all over it," he said. Other DocuSign customers include Microsoft Corp., which said it is using e-signatures to complete thousands of contracts a month online, and mortgage company First Magnus Financial Corp. in Tucson, Ariz.

The main draw of the new e-signature services is cost savings and convenience. Instead of sending one contract back and forth between parties via fax or overnight mail so that everyone can physically sign one original document, e-signatures allow the whole process to be done online. At First Magnus's lender-services arm, for instance, the company is using DocuSign to streamline insurance-policy processing and has cut transaction costs by 58% in the last year, resulting in tens of thousands in dollars of savings a year, said Jeff Arnold, the president of First Magnus Lender Services.

The new, Web-based e-signature services aren't as complicated to use because they don't require people to download special "digital certificates" from companies such as VeriSign Inc., which help authenticate Internet transactions and continue to be used in many industries. Some doubters want more proof that the new hosted Internet services are as secure as the older technology. Technology researcher Gartner Inc. estimates that through 2010, 75% of organizations required to use electronic signatures will choose "low cost, low technology" solutions instead of more complicated technology.

Companies considering e-signatures face a dizzying array of product choices in a fragmented and sometimes confusing market. With the hosted service sites, companies such as DocuSign allow customers to post documents on a secure Web site and send parties there to "sign" them electronically. (After answering several questions to receive a password, people use a computer mouse to click on a signature line, flagged with computerized yellow sticky notes. A cursive-style imprint of their name appears on the line.) Users can even select their favorite font for the lettering.

Other more established companies, such as Montreal's Silanis Technology Inc. sell e-signing software that companies can download directly onto their computers, although it also offers Web-based products. Interlink Electronics Inc., of Camarillo, Calif., makes software as well as electronic signature pads, such as those many big retailers use for credit-card purchase.

EOriginal Inc., of Baltimore, touts itself as an "e-vaulting" vendor: It works with companies such as DocuSign, Sertifi and Interlink to digitally archive signed documents and create document audit trails. That is important should contracts ever be challenged.

Concerns linger about the security and long-term storage of electronic documents, said Kristen Noakes-Fry, an analyst with Gartner. But, she adds, "I'm very optimistic about the market myself."

With DocuSign's e-signature product, the process starts when one party to a contract or other agreement gets an email saying they have documents to be signed. To sign, the user needs to register for DocuSign's service, a process that involves going to the Web site and getting a password. The company asks several security questions, such as listing recent addresses, which it can check against available data, such as motor-vehicle records.

Once the registered user clicks on a link in their email, they are taken to a DocuSign Web site to view the documents they need to sign. They click in the right places and then send the documents -- in Adobe Systems Inc.'s PDF format -- back to DocuSign for storage and archiving. DocuSign charges customers based on the volume of signatures they process. The service is priced per "envelope," usually $3 to $5 an envelope for big companies, a price that is far cheaper than an overnight package, DocuSign said.

DocuSign said it has processed more than three million online signatures since it was founded four years ago and is on track for transactions to increase 400% this year.

Some companies are using the technology for outbound sales and marketing calls: First Magnus Lender Services said it uses DocuSign to "freeze" customers when it gets them on the telephone to discuss insurance. If a person tells the First Magnus phone marketer that they are interested in an insurance policy, the marketer can ask them to go online as they are talking on the phone and walk them through the sign-up process within minutes. First Magnus's Mr. Arnold said his company has increased the number of policies sold by 24% since it started using DocuSign in this manner.

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