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Thursday, April 23, 2015

Consumer withdraws E-Sign Consent

QUESTION
Much has been said about obtaining E-Sign consent. But we received a notice from our borrower to withdraw the consent they had previously given to us. Now we are unsure how their withdrawal of E-Sign consent affects the disclosures that they had agreed to receive and already received. What are the disclosure consequences in a withdrawal of E-Sign consent?

ANSWER
The withdrawal by the consumer of consent to receive electronic records does not affect the legal effectiveness, validity or enforceability of electronic records provided to the consumer before the implementation of the withdrawal of such consent, if the applicable procedures to obtain the E-Sign consent have been fully implemented. [15 USC § 7001(c)(4)]

For instance, applicable procedures include that, prior to consenting, the consumers are to be provided with a statement of the hardware and software requirements for access to and retention of the electronic records, and they also consent electronically in a manner that reasonably demonstrates that they can access information in the electronic form that will be used to provide the information that is the subject of the consent.

The consumers’ withdrawal of consent to receive electronic records is effective within a reasonable period of time after the record provider receives the withdrawal. 

Under certain conditions, the consumers’ failure to comply may be treated as a withdrawal for E-Sign consent purposes if, after consumers give consent and upon their election, the following circumstances pertain:

1. A change in the hardware or software requirements needed to access or retain electronic records creates a material risk, such that consumers will not be able to access or retain a subsequent electronic record that was the subject of the consent; and

2. Consumers are provided with a statement of both the revised hardware and software requirements for access to and retention of the electronic records as well as the right to withdraw consent without the imposition of any fees for such withdrawal, and without the imposition of any condition or consequence that was not disclosed. The foregoing applies where, prior to consenting, consumers were provided with (A) a clear and conspicuous statement informing them of any right or option they have to the record provided or made available on paper or in non-electronic form; and (B) they had been notified of their right to withdraw the consent to have the record provided or made available in an electronic form, and of any conditions, consequences (which may include termination of the parties’ relationship), or fees in the event of such withdrawal.

Jonathan Foxx
President & Managing Director
Lenders Compliance Group