What are the risks of not using advanced eSignatures?

Posted by media on June 9, 2016 at 9:00 AM

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A mounting urgency to undergo digital transformation – whose steps we explored in an earlier post – is leading many companies to rush into adopting any innovative technologies, above and beyond those best suited for their needs or those who offer the highest legal certainty.

This type of reckless digitization can be extremely counterproductive given that it exposes organizations to all kinds of legal complications that could prevent them from jumping on the digital bandwagon.

Although we have looked at the advantages of specific departments and sectors actively using electronic signatures, particularly from a legal standpoint, we have not touched on how their misuse (or not using them at all) can lead to lawsuits and severely compromise a company’s reputation.

In today’s post, we list three examples of why digitizing the signing process should be carried out using a professional solution that offers explicit legal safeguards, and not through rudimentary systems or, as is often the case at present, by copying and pasting a JPEG or PDF file of a signature into documents requiring signed authorization.

This post is also available in Spanish.

 

Medical-related risks through improper use of electronic signatures

In 1999, three doctors from the Magee-Women’s Hospital in Pittsburgh, USA accused the hospital of adding electronic signatures without permission to results of various PAP smear tests - a test that is frequently used to diagnose uterine cancer.

The hospital claimed that a member of staff had simply been reviewing each PAP smear for quality assurance, but by doing so that individual had ended up committing medical malpractice.

The State Health Department of Pennsylvania was requested to investigate the case and did so over a period of five years, during which time it incurred severe public scrutiny, particularly as it was revealed that at least one incorrect diagnosis had been issued to a patient.

Even though a strong defense helped the hospital avoid paying millions in fines, the judicial costs and the unshakeable interest of local and national media in the scandal inflicted incalculable damage on the hospital’s reputation - a hospital that, prior to the scandal, had been carrying out some 100,000 PAP smear tests per year.

This entire court case could have been resolved quickly and easily in favor of the prosecution if an Authorized Timestamp had been used at that time, through which it would have been indisputable that the signatures were made without the knowledge and consent of the relevant signatories.

Fraudulent signatures used for banking

Recently, two lawsuits were reported in the Spanish media that demonstrated how the use of fraudulent signatures is one of the main reasons that the banking sector is particularly vulnerable at present. 

The first lawsuit concerned an ex-employee from Spanish bank BBVA accusing his former employers of illegally using his signature on 140,000 debt certificates, even though he had already retired from his job.

Even if the tribunal in charge of the case has since narrowed the number down to 4,400 illegal uses of the aforementioned signature, each certificate holder could technically accuse the bank of fraudulent practices and unlawfully signing documents, thus increasing the lawsuit’s severity and any legal fees.

As in the Magee-Womens Hospital lawsuit, the absence of evidence to show who had signed and when forced the bank into an admission of guilt with all the likely financial implications of such a move, as well as leading to it public image being significantly damaged.

If BBVA had possessed a database of unique and unalterable signatures, each registered with timestamped data validated by third parties (such as the sender and recipient’s email addresses, the exact time, date and place in which the signature was made) there would have been enough of a legal safeguard to avoid sticky legal situations.

To make matters worse, the bank appeared in the news again shortly after for having authorized a transfer from  a customer’s account that he actually never made, a transfer that was based on a fax signed with a false signature and without any other details about the customer’s identification.

The level of negligence here is so flagrant that it was not even necessary to call upon the services of a calligraphic expert to analyze the signature.

If BBVA had used an advanced electronic signature solution for their client to authorize  the transfer, the disadvantages of using a handwritten signature could have been eliminated: a signature made digitally using a tool such as Signaturit would always record biometric evidence as the signature was made, such as the style and speed of execution. Therefore, had the bank used an eSignature and found themselves taken to court, they could have been easily shown who exactly signed to authorize the transfer and when.

The bottom lines of these two court cases and other similar situations is this: digitizing the signing process and manipulating image files containing scanned signatures is not at all the same thing in the eyes of the law.

Advanced electronic signatures are an authentic guarantee against fraud and a powerful means of avoiding lawsuits or compromising one’s reputation, since a signer is unequivocally identified through the recording of various biometric data and geolocation at the moment he or she signs. In addition, the integrity of such data is backed up by Timestamps, which clearly certify that any information contained in the document was not altered once the signature was made.

Should you wish to try our advanced electronic signature solution, you can now do so with our free 14-day trial. For more information, do not hesitate to download the following whitepaper in which the features of our advanced eSignature are explored in greater detail.

This post is also available in Spanish.

Download Whitepaper eSignatures 101 (English)


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