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Lending online brings with it some risks, particularly with regard to security,
identity authentication and fraud.
As a result, Equifax is providing its SecureMark digital certificates for use
when electronically signing credit applications in order to protect lenders from
the risks of lending online and to increase consumer confidence in
transacting via the Internet.
Changes to the Consumer Credit Act mean that handwritten signatures are no
longer necessary as a means of signing credit applications.
Electronic signatures can be used to sign agreements online, providing lenders
with a new and immediate channel for acquiring customers, as well as the
opportunity to significantly improve customer service as more and more consumers
expect instant access to products and services.
Equifax recognises that currently there is some confusion about how and where
electronic signatures can be used, their legal standing and the advantages they
can bring to online transactions.
To answer these questions and dispel some myths, Equifax has worked with Olswang,
the legal specialists in e-business, to provide the financial services industry
with an insight into electronic signatures.
Neil Munroe, External Affairs Director at Equifax explained: “As more consumers
expect to be able to access services via the Internet, lenders are eager to
offer loans online, but are wary of the risks and unsure of how and when
electronic signatures can be used.
With this in mind, Equifax and Olswang have produced a guide to electronic
signing for online lending which provides the industry with the facts, in order
to help safely and securely provide customers with loans online.
“The development of SecureMark is part of Equifax’s ongoing commitment to
helping lenders and businesses operate best
practice, while meeting the ever-changing demands of their customers."
Online transactions are here to stay and with SecureMark businesses can minimise
the risks and provide essential peace of
mind to their customers.”
The legal position
Consumer credit agreements are regulated by the Consumer Credit Act 1974.
Recent changes to this Act – the Consumer Credit Act 1974 (Electronic
Communications) Order 2004 - mean that handwritten signatures are no longer
required for regulated credit contracts and that consumer credit documentation,
albeit with some exceptions, can now be signed and sent electronically.
The two types of electronic signature
There are two types of electronic signatures offering different levels of
security.
► Advanced signatures, sometimes
referred to as 'certified electronic signatures', act as a kind of
'super-strength' signature, which automatically discharges the obligations for
evidence since they are deemed to authenticate the signatories and the data
itself.
This is because they provide secure qualified certification via regulated and
supervised certificate providers which have to fulfil various detailed statutory
obligations in order to issue such signatures.
Equifax SecureMark digital certificates are regulated in this way.
► Basic electronic signatures, which
depend on a kind of self-certification system under which the person using the
signature has to give statements as to their authenticity.
They are not technically secured via special encryption or independently
verified by a regulated person so they do not
offer the same level of assurance.
How can advanced electronic signatures prevent fraud?
There are two parts to the authentication of someone, whether in person or on
the Internet; validation and verification.
Validation is a process one uses to prove an identity exists, for example by
checking the Electoral Roll, or checking customer lists to find that there is a
Joe Bloggs at 5 Clearwood, Wiltshire.
By this method, you know that this identity is not fictitious.
Verification is the process used to prove that the individual you are dealing
with owns that validated identity.
When dealing with consumers in person most companies require individuals to
provide documents such as passports, driving licences and utility bills to
accomplish this, as well as running the validation checks.
Using SecureMark digital certificates for advanced electronic signatures
provides both of these checks in one easy, consumer friendly step in order to
give lenders the same comfort online as when dealing with customers
face–to-face.
How can advanced electronic signatures be trusted?
To issue certificates for use with advanced electronic signatures, a company has
to be accredited as a trust services (the term used for commercial security
services) provider.
Equifax is accredited by tScheme, a self-regulated, non-profit, industry led
body set up in 2000 under the Electronic Communications Act 2000.
In tScheme's own words; "tScheme gives you confidence by independently assuring
that the Trust Services you are using meet
rigorous quality standards".
tScheme recognises the need to have trust in e-commerce and the need for trust
services that help defend against fraud and loss of privacy.
tScheme has been appointed by the Secretary of State to establish controls and
standards over trust services such as Equifax’s SecureMark.
It also approves the trust services in order to provide confidence to those who
use them. Accredited providers display the tScheme seal indicating that they
operate to tScheme standards.
Equifax SecureMark is accredited as the UK’s first and only trust service
provider of authenticated certificates online.
Ease of use
The challenge facing online lenders is that they need a security solution that
offers the right level of protection without causing delays to their service.
Customers turn to online providers for speed and convenience, so lenders need to
maintain this unique offering in order to remain competitive.
The benefits of advanced electronic signatures mean lenders gain a fast,
effective means of authentication.
Equifax’s SecureMark digital certificates can be incorporated into the online
registration process, making them a seamless part of a lender’s existing
systems.
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