A fact of business today is that customers – both consumers and other businesses – and employees expect to transact digitally. To remain competitive, companies find themselves increasing their efforts to digitally transform their businesses.

Successfully implementing this transformation requires careful planning to ensure regulatory compliance, a smooth integration with existing business technology and a positive customer experience.

Each issue will feature in-depth insight on a timely and important current topic.

In this issue, for our Insights piece, we analyze how legislators and regulators are continuing to move forward with digital transformation policies and bills. In addition, this edition includes reports on other recently enacted federal and state laws, federal and state regulatory activities, fresh judicial precedent and other important news.

For related information regarding blockchain and digital assets, please see our monthly bulletin Blockchain and Digital Assets News and Trends.


Continuing the digital transformation into 2021

Last March, in response to the national emergency arising from COVID-19, the Office of Management and Budget (OMB) directed all federal governmental agencies to utilize technology to the greatest extent practicable to support mission continuity (OMB 2020 Memo). The OMB 2020 Memo notes that over last two decades the federal government has made significant investments to support technology infrastructure, scalable technology platforms and digital delivery of governmental mission support and mission delivery functions, and urges agencies to continue to address their respective digital delivery services through an attached set of “frequently asked questions.”

While the OMB 2020 Memo is a comprehensive resource for guidance on the implementation of electronic signatures under the federal Electronic Signatures in Global and National Commerce Act (ESIGN), the Government Paperwork Elimination Act (GPEA) and various digital identity guidelines for governmental purposes, it should serve as a reminder to businesses that deploying advanced technology solutions to better deliver products and service to commercial customers, both consumers and businesses alike, should also be treated as a business-critical mission. This is especially true as companies confront the expanding, multi-faceted need for environmental, societal and governance (ESG) strategies that will promote continued economic growth, environmental sustainability, diversity and inclusiveness in employment and customer service, and community engagement.

Utilizing advanced technology is becoming a key element of economic survival and expansion for everything from reducing the company’s carbon footprint and use of non-renewable resources, to identifying and hiring new talent, to protecting data privacy, to product and service delivery, to managing supply chains and distribution. By aggressively embracing responsible, carefully crafted technology to support all these business processes, companies will be better positioned to maintain the safety and well-being of their customers, their employees, their communities, their balance sheets, and in some cases their charter mandates for business continuity and safety and soundness.

In this spirit, we are taking this opportunity to republish a piece we prepared called “So You Want to Go Digital.” It provides an overview of the key elements for taking your business online. Read more.



Sandbox programs

South Dakota enacts insurance product “sandbox”: On March 9, 2021, the governor of South Dakota signed into law a bill, SB 55, that allows the insurance director to grant an insurance innovation waiver regarding the requirements imposed by law to enable a person to obtain access to a limited portion of the insurance market to test an innovative insurance product, which includes the use of new or emerging technology such as blockchain technology.

Utah creates General Regulatory Sandbox Program: On March 22, 2021, the governor of Utah signed into law HB 217, which creates the General Regulatory Sandbox Program, which allows the Office of Regulatory Relief – a newly created regulatory body – to waive laws or regulations applicable to participants under certain conditions to allow such participants to offer innovative products or services.

Remote online notarizations and eRecording

Virginia enacts law regarding recording electronic documents and revises its existing RON law: On March 11, 2021, the governor of Virginia signed into law HB 2064, which provides that (a) if a clerk has an eRecording System, the clerk shall follow the provisions of the Uniform Real Property Electronic Recording Act, and (b) if a clerk does not have an eRecording System, the clerk shall record a legible paper copy of an electronic document, provided that such copy otherwise meets the requirements for recordation and is certified to be a true and accurate copy of the electronic document by the party who submits the document for recordation. Further, the bill adds additional forms of “satisfactory evidence of identity” when a notary is using video and audio communication. The bill contains an emergency clause and took effect upon signing.



Five federal agencies, including the CFPB, seek insight into financial institutions’ use of artificial intelligence: On March 29, 2021, the Federal Reserve Board, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) announced a request for information (RFI) seeking to gain input from financial institutions, trade associations, consumer groups, and other stakeholders on the growing use of artificial intelligence by financial institutions. The RFI seeks comments to better understand the use of AI by financial institutions; appropriate governance, risk management, and controls over AI; challenges in developing, adopting, and managing AI; and whether any clarification would be helpful. The RFI was published in the Federal Register on March 31, 2021. Comments must be received by June 1, 2021.


California DFPI money transmission opinion letters

  • Transactions in which recipients are paid before the company is reimbursed are not subject to licensure: On February 11, 2021, the California Department of Financial Protection and Innovation (DFPI) published a final opinion letter stating that transactions where an entity places a hold on a sender’s debit card and then transfer’s funds from the company’s master disbursal account to the recipient, after which the hold status is converted to a payment/post status, are not money transmission. The DFPI stated that because funds are not transferred to reimburse the company until after the beneficiary has been paid, the consumer funds are not at risk.
  • Purchase and sale of cryptocurrency: On February 9, 2021, the DFPI published a final opinion letter stating that a company that sold cryptocurrency from its inventory to clients, or purchased cryptocurrency from clients using its funds, is not engaged in the business of money transmission because its activities are limited to buying and selling virtual currency.
  • Agent of the payee exemption involving closed loop stored value: On February 5, 2021, the DFPI published a final opinion letter stating that a company was acting as an agent of the payee when it offered its merchant clients, which are primarily daily fantasy sports providers, an ACH platform through which customer can purchase credits for the customers’ accounts with the merchants. The credits can only be redeemed for goods or services by that merchant and not any other entity. Each transaction in which a merchant customer purchases credits is governed by an agreement in which the company is the merchant’s authorized agent for accepting payments. The DFPI stated that while the agent of the payee exemption is generally unavailable for money transmission itself – the exemption only covers payments for “goods and services” – because the transactions at issue involved payments to purchase closed loop stored value, which is not money transmission, the exemption applied to such transactions.




Department of Education was justified in sending notice electronically to borrowers: In Quero v Cardona 2021 WL 1146939 (SD New York, March 25, 2021), the plaintiffs sought attorneys’ fees after entering into a settlement agreement with the Department of Education (DOE) regarding DOE’s alleged failure to discharge certain loans in accordance with applicable federal law. The DOE opposed the motion for attorneys’ fees because it argued that the DOE’s position was “substantially justified.” As part of arguing that the government’s actions were not “substantially justified,” the plaintiffs alleged that DOE never justified sending emails in lieu of postal notices to email accounts the plaintiffs did not fully set up. The plaintiffs also claimed that the consents the plaintiffs gave to receive electronic correspondence were insufficient to support the use of email instead of postal notices. The DOE argued, in part, that its decision to provide notice electronically was substantially justified because the notice complied with ESIGN’s consumer consent requirements. The court, in relying on a report and recommendation issued by a magistrate judge, found that the plaintiffs elected to receive electronic correspondence from both the DOE and its loan servicers – though neither the court nor the report and recommendation analyzed specifically whether the disclosures complied with ESIGN consumer consent requirements – and that the government’s use of “electronic notices was ‘justified to a degree that could satisfy a reasonable person.’”

Electronic signatures and general online contract formation

In Acevedo v Russell Cellular, Inc., 2021 WL 973949 (ED California, March 16, 2021), the court found that the plaintiff signed the arbitration agreement and that a valid agreement to arbitrate existed. The plaintiff alleged that the defendant’s store manager created the plaintiff’s username and password and then proceeded to sign the onboarding documents, including the arbitration agreement. The defendant put forth evidence demonstrating that (a) the plaintiff needed to use the same username and password he created when submitting his employment application and executing his offer of employment, (b) plaintiff could only access the onboarding materials via a unique hyperlink that was sent to his personal email provided during the application process, (c) employment records do not show the plaintiff at the relevant store on the date the arbitration agreement was signed, and (d) employment records do not show that the store manager was at the store when the onboarding documents were signed, which were signed after the store was closed. Taken together, the court found that the defendant put forth sufficient evidence to demonstrate that the plaintiff electronically signed the arbitration agreement.

In Blocker v US Express Enterprises, Inc., 2021 WL 825610 (ND Illinois, March 4, 2021), the court upheld the arbitration agreement because it contained the plaintiff’s electronic signature and his social security number, which the court indicated is personal information known only to the plaintiff.

Court upholds arbitration agreement where portion of visible agreement did not contain the arbitration clause: In Emanuel v Handy Technologies, 2021 WL 1084688 (1st Cir, March 22, 2021), the court upheld an arbitration agreement whereby the user was (a) presented with a screen that stated “To continue, please accept the revised Independent Contractor Agreement, (b) the screen displayed text that was a portion of the agreement, (c) and the screen contained an “Accept” button that the user needed to click to proceed. The court stated that the fact that the screen only displayed part of the agreement – and did not include the portion with the arbitration clause – and that the user was not required to scroll through the entire agreement before clicking “Accept” was not grounds to find that the user did not agree to the arbitration clause. Further, the court stated that just because the plaintiff did not review the entire agreement does not mean that the plaintiff is not bound by it. Further, while the plaintiff entered into the arbitration agreement on her phone, the argument that she did not receive reasonable notice due to the nature or size of the transaction was not persuasive. The court distinguished this case from prior case law on the grounds that here, the plaintiff went through an extensive process to get this point, including completing an online application, attending an in-person training session, and undergoing a background check, that the size and nature of the contractual relationship between the parties was clear. Further, the plaintiff had to explicitly click “Accept.” Therefore, the plaintiff had reasonable notice of the agreement that contained the arbitration clause.


In the 2021 edition of Chambers FinTech, Chambers and Partners identified DLA Piper as “one of the foremost firms in the country for transactional FinTech matters.” Partners Margo H. K. Tank and David Whitaker were recognized individually for their work in FinTech.

Partners Margo H. K. Tank and David Whitaker have each been named “Acritas Stars – independently rated lawyers” for 2021. Acritas Stars are client-nominated attorneys recognized for their stand-out performance in private practice.

The Financial Times has ranked DLA Piper second on its lists of Most Innovative Law Firm and Most Digital Law Firm in the FT North America Innovative Lawyers 2020 report. The Financial Times particularly noted our pro bono legal work on behalf of the UN’s World Food Programme, which the authors of this publication assisted with.


The Law of Electronic Signatures, 2020 - 2021 Edition (Thomson Reuters) is an essential guide to electronic signatures and records laws, including the context in which the laws were adopted and the ways in which the authors believe the drafters intended them to be interpreted. The publication is prepared by authors, including Margo Tank and David Whitaker, with more than 30 years combined experience that includes involvement with the drafting and passage of Electronic Signatures in Global and National Commerce Act (ESIGN), the preparation of the Uniform Electronic Transactions Act (UETA), the creation of SPeRS™ (the Standards and Procedures for electronic Records and Signatures), and serving as counsel to the Electronic Signatures and Records Association. The insights they provide will be indispensable to anyone seeking to understand the impact of, and the liability associated with, using electronic signatures and electronic records.

These insights include:

  • Details on the legal requirements for using electronic signatures and records, including delivery, presentation, signing, and record retention
  • Comprehensive tables itemizing the state variations to the uniform UETA language
  • Special considerations for using electronic signatures and records in connection with emerging and evolving technology
  • Using electronic records and signatures in specialized transactions and documents, such as securities, chattel paper, and mortgages
  • Analysis of the interplay between ESIGN, UETA, and many other key laws and regulations
  • Identification and summaries of recent legal developments and court cases impacting electronic signatures and records

The MBA Compliance Essentials Remote Online Notarization State Surveys, developed by DLA Piper, provides a comprehensive look at RON requirements in each state that has enacted RON legislation. These fully editable surveys are organized by category of requirements, including registration, technology, seal and signature, certificates of RON acts, journal, authentication, session, recording, and additional requirements. Companies can purchase the full package which includes surveys for all states that have enacted RON legislation along with a matrix summarizing state requirements, or companies can purchase information about individual states as needed. Read more.