Collections: Electronic Signatures and the Effect on Collections

Electronic signatures on loans and other credit agreements are becoming increasingly the norm for many of our clients. However, like all contracts that are eventually turned over for collection by a third-party, our clients need to consider evidence of where the contract was signed. 

Under the FDCPA, a suit may be filed either: where a defendant lives, OR where the contract was signed. The attorneys at LAW are licensed in Virginia and can only file suits in Virginia. Generally, this is not an issue. For example: if your defendant lived in Virginia, and still lives in Virginia, then this is likely not going to be an issue. However, if your defendant lived in Virginia when the contract was signed but then moved out of state, the suit would need to be filed in the new state unless you can sue where the contract was signed in Virginia. That is where the catch comes in. If your member lives outside of Virginia, but they signed the contract outside of Virginia or you do not know where the contract was signed, LAW will need to refer your case to an attorney who practices in another state.  

Prior to electronic signatures, it was easier for our clients to tell us where a contract was signed. Generally, wherever our client’s office was located, was the venue for a future suit. That has changed for many of our clients with the ability to email contracts for signature. If your member happens to be vacationing in the Outer Banks when they sign for their loan or credit card, you may run into a venue issue down the line. Or, if your member lives outside of Virginia when you turn the account over for collections and you do not know where the contract was signed, we also would not be able to file suit in Virginia. So, what do you do?

The first line of defense is going to add proof of where your contract was signed to every document signed by your members. There are several options for achieving this. First, you can add an affidavit of venue to your contracts. This is a simple signed document stating the date signed, name of your member(s), account/loan number, and a statement that the document was signed in the following county, city, and state. The second option is to work with your electronic document provider to add language at the end of your signed documents with a similar statement for your members to fill in when they sign. 

But, what about IP addresses? Many of our clients have stated that their electronic document provider provides an IP address sheet at the end of the loan. The problem with relying on IP addresses is that they are often not accurate. Internet security is vitally important, and many security systems prevent sharing of actual IP addresses and locations. 

We have helped many clients navigate proof of venue at the time of signing and would be happy to discuss your current processes. Additionally, we review every case to determine venue and can assist clients when issues arise.