Federal legislation on the use of electronic signatures in Internet commerce may be necessary because of conflicting state laws, the chairman of a congressional panel said Wednesday.
"Normally, I am a state-type person, but I can see in this case a valid argument for perhaps federal legislation some day," said Rep. Michael N. Castle, R-Del., head of House Banking's monetary policy subcommittee.
Banks, credit card companies, and a public-private coalition called the Electronic Commerce Forum asked Congress to adopt a national standard-not overly restrictive-clarifying what makes a contract signed in cyberspace legal. (See related report on page 18.)
"If the interstate highway system had to be built one mile at a time, one town at a time, one county at a time, it would have never happened," said J. Scott Lowry, president of Digital Signature Trust Co., a subsidiary of Zions First National Bank of Salt Lake City. "We believe the same is true with the information superhighway. It needs federal assistance, and it needs it now."
More than 30 states have passed or are considering laws with various standards for technology and liability, witnesses said.
Representatives from Visa International, Citicorp, Zions, and the coalition said the federal law should recognize electronic documents and signatures as legal, exempt financial institutions from state laws, permit a broad choice of technologies, and let liability issues be settled by contract.
But Reps. Jesse L. Jackson Jr., D-Ill., and Joseph P. Kennedy 2d, D- Mass., were critical of industry arguments that the government should foster on-line buying and selling.
"E-commerce is important," Rep. Jackson said. "But its promotion should be the goal of the free enterprise system and the free market, not the goal of Congress."
"My basic concern has to do with whether we are even prepared at this point to draw conclusions," Rep. Kennedy said. Some basic federal law may be practical, but states should be allowed to develop their own approaches for now, he said.
Witnesses contended that without a federal standard, interstate commerce on the Internet would be stifled and the United States would fall behind foreign competitors.
Letting every state have different digital signature requirements would be as inconvenient as making consumers carry 50 credit cards, said Andrew Konstantaras, a Visa vice president.
