Banks could make the disclosures required by federal consumer protection laws over the Internet instead of on paper under a bipartisan bill introduced in Congress this week.
Under the Electronic Disclosures Delivery Act of 1999, financial companies could provide on-line notices to satisfy laws covering everything from fair credit to mortgages, from Truth-in-Lending to car leasing.
However, banks would have to get permission from customers first. Consumers would have to consent by e-mail or other electronic means to ensure they are able to receive on-line disclosures.
The substance of the disclosures and the legal rights and responsibilities of all parties would not be changed by the legislation.
"Many financial services, particularly those involving loans and mortgages, remain off-limits to electronic commerce because of antiquated laws requiring paper documents or face-to-face transactions," said Rep. Marge Roukema, chairwoman of the House Banking subcommittee on financial institutions and a co-sponsor of the bill.
"This legislation is necessary if we are to take full advantage of the current technology," the New Jersey Republican said.
But Rep. Roukema said Congress should provide uniform standards so "disclosures will be delivered to consumers under the same set of rules by all financial services providers."
Financial and software company representatives praised the legislation, saying it would spur mortgage lending on the Internet, speed loan approvals, and reduce overhead costs, which in turn would lower the price of credit.
If enacted, the legislation would be "an important first step in modernizing these laws so that everyone may benefit from new technologies sooner rather than later," said Cameron King, president of the Electronic Financial Services Council and executive vice president for electronic commerce at Countrywide Home Loans Inc.
But consumer advocates complain that electronic disclosures raise questions about legal authenticity and that borrowers should be given paper copies of important documents.