Our primary purpose here today is to explore the ways in which financial institutions and other businesses can use electronic authentication to safeguard financial and other transactions over open networks. We also want to determine what federal legislation may be necessary to authorize the use of this technology and promote the expansion of electronic banking and commerce.
As the internet has developed, financial institutions and other businesses increasingly have offered customers the option of conducting personal and business transactions by exchanging information over open networks. One can transfer money between accounts, purchase stocks, and order everything from groceries to books over the internet. While this technology offers increased convenience, it exposes the parties to certain risks.
Sending a credit card number or bank account information over an open network is at best unsettling and at worst extremely dangerous, especially if it is impossible to verify the person to whom the message is going. My staff has been briefed on how easy it is for criminals to set up fraudulent web sites for the purpose of inducing unsuspecting customers to send them credit card or other personal financial information. In order to feel secure about processing a transaction electronically, an individual needs to be able to verify that any information transferred over open networks is delivered, in its original form, to the intended recipient.
Electronic authentication, as we will hear today, provides a way for parties to verify the various aspects of an electronic message. A number of electronic authentication technologies, including digital signature technology, are currently available, but their widespread use has been limited by the absence of a uniform legal framework to govern that use.
While a number of states, including my own state of Utah, have adopted or are considering legislation on electronic authentication, there is no consistent standard. Internet transactions do not respect state boundaries, and it may be difficult for parties to determine which state law governs a particular transaction, which technologies that state recognizes, and how that state treats issues of liability. Consequently, the expansion of electronic banking and commerce will be stifled, until we put in place a uniform standard to authorize and validate the use of electronic authentication.
I intend to introduce legislation to provide that uniform framework. Over the past few months, my staff has worked on a bill to govern the use of electronic authentication in the financial institutions sector. We have sought to develop minimalist legislation that would authorize and validate the use of electronic authentication technology without excessive preemption of state law. The legislation would also specifically preserve consumers' rights under the Truth in Lending Act and the Electronic Fund Transfer Act. Finally, the legislation would be technologically neutral to avoid limiting the development of new and improved technologies.
We recognize, however, that electronic authentication is an issue that reaches beyond financial institutions and that we need to encourage competition among providers of electronic authentication services. With that goal in mind, I intend to explore the very real need to expand any legislation to include appropriate businesses beyond purely the banking sector. As we complete that process, we welcome the input from the experts testifying today as well as any others in the field. I plan to finalize this expanded legislation and introduce it early in next year's session.
With that brief introduction, I would like to introduce and hear from our panel of witnesses.
Ira Parker is a partner with the law firm of Alston & Bird. Mr. Parker will present a tutorial on electronic authentication.
Our second panel of experts will share with us their views on whether there is a need for federal legislation on electronic authentication and what that legislation should include.
Alfred Pollard is the Senior Director for Legislative Affairs at the Bankers Roundtable
Scott Lowry is the President of Digital Signature Trust Company in Salt Lake City, Utah.
Michael Nugent is General Counsel for Technology and Intellectual Property at Citibank.
Robert Kramer is Vice President for Policy Analysis and Development at Bank of America. Mr. Kramer is testifying today on behalf of the Coalition of Service Industries.
Richard Mossburg is Associate Counsel Government Affairs at the Ford Motor Credit Company Legal Office in Dearborn, Michigan. Mr. Mossberg is testifying today on behalf of the Electronic Commerce Forum.
Daniel Greenwood is Deputy General Counsel with the Information
Technology Division of the Commonwealth of Massachusetts.
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