Court Case showcases Digital Signing’s shortfalls but there is a Solution

Digital Signing adoption across the world is rowing with Government Regulations being adapted to allow a huge range of documents to be Digitally Signed.

Getting documents signed digitally is not without risks however and if you use the wrong provider or software solution to
get your serious documents signed you could find yourself in trouble in the future.

One recent court case in Australia involving a business lender who was using DocuSign and it perfectly highlights the possible repercussions if incorrect signing processes are followed or the wrong software selected.

Read on for details of the case plus how they could have avoided the issue in the first place.

Marketlend Pty Ltd v Blackburn [2020] NSWDC 358

The business lender Marketlend advanced credit of $600,000AUD to a company called Blackburn, run by a husband and wife. Using their standard digital signing process and DocuSign software the loan documents including personal guarantees were sent for signing to both the husband and wife who both signed digitally. Blackburn later went into liquidation and were unable to make any significant repayments to Marketlend, with the debt growing to over $700,000.

A court case ensued.

Marketlend felt they had a viable case – relying upon the wife’s personal guarantee as proof of initializing the loan agreement. According to the wife, they were separated at the time of the loan agreement and the wife denied signing anything or being liable for the $700,000.

Although Marketlend had a digitally signed document by both parties, it was later found that the husband had access to both her company email and DocuSign account, and signed the documents on her behalf. Utilizing information saved by the e-signing company and mobile telephone location evidence – the court corroborated the wife’s stance, which in turn meant the loan agreement was not legally binding.

In this case, the lack of signer authentication and identity verification throughout the business loan signing process was Marketlends downfall.

So, what could they have done differently to ensure the identities of Blackburn’s signee’s were correctly verified, and that the digital documents were executed in a way to protect from forgery?


How to Avoid this Issue by Verifying Who is Signing a Digital Document

There are a number of different techniques Marketlend could of utilised to verify the documents were digitally signed by
the right person – if they were using software which offered those features such as Secured Signing.

Along with email verification and document passwords, Secured Signing offers two additional options to verify the identity
of who is signing:

SMS Verification

As this case showed, company email addresses are not 100% secure and although email verification and password protecting documents is a good start – including a mobile verification step takes verifying who is signing to the next level, after all it’s not often people are without their phone.

Secured Signing’s SMS Verification feature sends an SMS code to the signee’s mobile phone which is used to access the document before signing can take place.

Video Confirmation

Having both email and SMS verification add a layer of protection during the initial phase of digitally signing a document, but access to both can still be compromised.

For the ultimate protection, Secured Signing have created a feature called Video Confirmation which can verify & prove who signed a document easily in the future.

With a simple tick of a box when signing documents – signees must record a 10-second video of themselves performing a specific random gesture during the signing process. The recording is easy for the signee to complete and can be done on any device so adds no friction to the signing process.

Watch the full Video Confirmation demo video here!

The completed video recording then attaches automatically to the signed document and can be accessed at the time to verify the identity of the signee and in the future as long-term evidence that proves exactly who digitally signed the document.

Had Marketlend been using Secured Signing’s Video Confirmation feature they would have quickly seen it was not the wife signing the document and never would have advanced the $700,000 avoiding this issue completely.

Worried about your own digital signing solution or digital signing in general?

If you’re getting serious documents signed,  successfully verifying a signee’s identity is an important step in the digital signing process and ensures a digitally executed document can be upheld in court, or in general business proceedings.

Secured Signing are the only digital signing platform offering the Video Confirmation feature and it’s actually just one of the many features we have available to ensure non-repudiation of contracts.

If after seeing this court case you are worried about your current digital signing solution and are serious about safeguarding your business, signatures and documents, get in touch today and we’ll work with you to ensure your company is protected.