How Do E-Signatures Work?

E-signatures (electronic signatures) are digital equivalents of handwritten signatures used to sign documents electronically. They are widely recognized for their efficiency, security, and convenience, offering a paperless way to authenticate contracts, agreements, and other important documents. Here’s an overview of how e-signatures work, the technology behind them, and their security features.

1. The E-Signature Process

The process of creating and verifying an e-signature typically involves the following steps:

a) Document Preparation

• A user uploads or creates a document that requires a signature using an e-signature platform (e.g., DocuSign, Adobe Sign, HelloSign).
• The sender identifies the areas that need to be signed (e.g., on a contract, form, or agreement) by placing signature fields in the required locations.
• The system then sends the document to the signers via email or a secure link.

b) Signer Authentication

• Before signing, the platform ensures the identity of the signers using different methods such as:
  • Email Verification: The signer receives a unique link via email.
  • Two-Factor Authentication (2FA): The signer may be asked to verify their identity through a one-time password (OTP) sent to their phone.
  • Knowledge-based Authentication (KBA): The signer answers questions based on personal or financial history.

These authentication steps ensure that the signature is tied to the right person.

c) Signing the Document

• Once authenticated, the signer can review the document and electronically sign it. There are several ways to sign electronically, depending on the platform:
  • Typed Signature: The signer types their name, and the system converts it into a signature-like image.
  • Drawn Signature: The signer uses their mouse, stylus, or finger to draw their signature.
  • Image Upload: The signer uploads a scanned image of their handwritten signature.
  • Click-to-Sign: The signer clicks a button or checkbox, confirming their approval of the document.

d) Document Encryption and Tamper-Proofing

• Once signed, the document is typically encrypted to prevent any alterations. Encryption ensures that the document cannot be tampered with after signing, and any attempt to modify the document would invalidate the signature.
• An audit trail is generated, recording key information such as the time, date, IP address, and identity verification details, providing proof of the signature’s validity.

e) Signature Verification

• To verify the validity of an e-signature, users can view the audit trail or use the platform’s built-in verification tools. Some platforms also use certificates to confirm that the document and signature have not been altered.

2. Types of E-Signatures

There are different types of e-signatures, each offering varying levels of security and verification:

a) Simple Electronic Signatures

• A basic electronic signature could be a typed name or an image of a handwritten signature.
• While easy to use, this type offers minimal security and is mostly used for low-risk documents.

b) Digital Signatures

• Digital signatures are a more secure form of e-signatures and involve cryptographic technology.
• They use public and private keys to create a unique, encrypted digital fingerprint that links the signer to the document. This is verified through a digital certificate, issued by a trusted Certificate Authority (CA) such as DocuSign or Adobe.
• Digital signatures ensure the authenticity of both the signature and the document, and any changes made after signing will invalidate the signature.

3. Legal Validity and Compliance

E-signatures are legally recognized in many countries around the world, as long as they meet certain criteria. The main laws that govern the legality of e-signatures include:

• ESIGN Act (USA): The Electronic Signatures in Global and National Commerce Act establishes the legal status of e-signatures in the U.S.
• UETA (USA): The Uniform Electronic Transactions Act sets rules for electronic signatures and records in business and government transactions.
• eIDAS (EU): The Electronic Identification, Authentication, and Trust Services regulation provides a legal framework for e-signatures across EU member states.
• PIPEDA (Canada): The Personal Information Protection and Electronic Documents Act governs e-signatures in Canada.

For an e-signature to be legally binding, the following conditions generally need to be met:

• Intent to Sign: The signer must intend to sign the document.
• Consent to Use Electronic Signatures: All parties must agree to use electronic signatures.
• Record Retention: The document must be stored in a way that preserves its integrity and is easily accessible.

4. Security Features of E-Signatures

Security is a critical aspect of e-signatures, ensuring that documents are protected and signatures are authentic. Some key security features include:

a) Encryption

• E-signature platforms use encryption (typically AES-256) to protect the document and its signatures. This prevents unauthorized access or tampering during and after the signing process.

b) Audit Trails

• A detailed audit trail is generated for each document signed electronically. It records who signed, when they signed, where they signed (based on IP address), and how they authenticated themselves.

c) Tamper-Sealing

• After the document is signed, it is locked and sealed with a digital certificate. Any attempt to alter the document after signing would break the seal, signaling that the document has been tampered with.

d) Authentication Methods

• As mentioned, multiple layers of authentication (such as 2FA, passwords, or KBA) ensure that the person signing the document is who they claim to be.

e) Cloud Storage and Backup

• Documents signed electronically are often stored securely in the cloud, with backup copies, ensuring they are safe from accidental loss or damage.

Summary

E-signatures simplify and streamline the process of signing documents while maintaining legal validity and security. Whether for businesses, legal contracts, or HR purposes, e-signatures eliminate the need for physical paperwork, allowing users to sign and manage documents remotely, efficiently, and securely. By leveraging encryption, authentication, and audit trails, e-signatures offer a reliable and secure alternative to traditional handwritten signatures, making them an integral part of today’s digital transactions.

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If you would like to learn more about how YouManageHR can help your organisation send letters and distribute documents with e-signatures to employees via Employee Self Service please contact us on 0330 223 6180 or via email enquiries@Peoplefirsthr.co.uk . Alternatively, click the button below to request more information and one of our consultants will be in touch shortly.