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
