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Life Health > Running Your Business > Selling

House Could Vote on Online Notarization Bill Monday

By Allison Bell

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What You Need to Know

  • H.R. 1059 is a new version of a bill that passed in the House last summer.
  • Many financial services groups back the bill, noting that temporary changes to such laws during the pandemic caused no problems.
  • Opponents worry that requiring notaries to collect and keep sensitive consumer information without proper oversight could increase the risk of fraud.

Members of the U.S. House could vote on H.R. 1059, the new version of the Securing and Enabling Commerce Using Remote and Electronic Notarization Act bill Monday.

House leaders have put the SECURE Notarization Act bill on a list of bills that qualify for quick consideration.

H.R. 1059 would set minimum national standards for online notarizations, and it would let a consumer in one state use a qualified online notary from any other state if the notarization involved a transaction related to interstate commerce.

Many financial services groups, including the American Council of Life Insurers, the Insured Retirement Institute and the National Association of Insurance and Financial Advisors, have been strong supporters of the SECURE Notarization Act effort, arguing that promoting easy access to remote online notarizations will make completing life insurance and annuity transactions online faster and easier.

Some other groups, including the California League of Independent Notaries and the Electronic Frontier Foundation, argue that the bill could increase the risk of fraud by requiring notaries to collect and keep sensitive consumer information and giving states no good way to oversee the activities of out-of-state notaries.

What It Means

Implementation of H.R. 1059 could help your clients do business with you and other providers of financial services and products online.

Increased use of remote notarization services could also push life insurance agents, financial advisors and financial product providers to spend more time vetting online notaries.

Notaries

A notary public is a state representative who verifies the identity of an individual signing a document and who determines whether the signer understands the document and is free from coercion.

Consumers often need to use notary services when they change life insurance policies or annuity beneficiaries, sign power of attorney affidavits or authorize third parties, such as children or spouses, to receive information related to their life insurance policies or annuities.

H.R. 1059

H.R. 1059 was introduced by Rep. Kelly Armstrong, R-N.D. It has 11 Democratic co-sponsors and four Republican co-sponsors.

The bill is similar to two House bills introduced in earlier congresses — H.R. 6364, a bill introduced in March 2020, and H.R. 3962, a bill introduced in June 2021 — and to related bills that were filed in the Senate.

H.R. 6364 attracted 82 co-sponsors. It and its Senate companion died in committee.

H.R. 3962 attracted 128 co-sponsors. The Senate companion died in committee, but H.R. 3962 passed by a 323-92 vote in the House.

Growing State Acceptance

Sixteen states allowed remote online notarizations before the COVID-19 pandemic started. Other states rushed to create permanent or temporary authorizations for remote online notarizations after the pandemic led to stay-at-home orders.

Delaware, Connecticut and California are among the states that were slow to allow remote online notarizations.

Delaware now has a new remote online notarization law that’s set to take effect Aug. 1.

Connecticut does not allow remote online notarizations. A new state bill, H.B. 6244, could allow Connecticut notaries to perform notarizations electronically.

California allows the use of mobile notary public services but does not permit notaries to provide services through remote online systems.

A.B. 743 is a California bill that could allow the use of remote online notarizations. The Assembly Judiciary Committee could hold a hearing on the bill March 16, according to the state legislative tracking system.

The Supporters

Groups such as the American Land Title Association and the Mortgage Bankers Association have led efforts to pass national remote online notarization bills.

They have argued that the COVID-19 pandemic showed that temporary lockdown-period online notarization access laws made doing business easier for consumers and caused no problems.

Opponents

Matt Miller, a San Francisco-based notary and president of the California League of Independent Notaries, opposed the earlier versions of the SECURE Notarization Act bills, and he said he also opposes the new version.

“The bill language is exactly the same,” Miller said in an interview. “All the concerns remain.”

The bill lacks adequate notary registration and liability provisions, and it creates incentives for consumers to use low-cost, low-quality online notaries based in the states with the weakest notary standards, Miller said.

Miller contended that use of weak notarization methods and oversight could lead to an increase in fraud.

The Electronic Frontier Foundation, a technology rights group, has also expressed concerns about the SECURE Notarization Act bills.

“Currently, standard in-person notaries in many states do not retain copies of notarized documents or even copies of driver’s licenses or other ID credentials,” the foundation and two other groups wrote in a public letter sent to Senate Judiciary Committee leaders in August 2022. “In contrast, H.R. 3962 would require an online notary public to collect ID credentials and other data, including facial recognition biometrics and the contents of personal legal documents.”

Remote online notaries would have to keep the documents and credentials — and audiovisual recordings of the notarization sessions — for at least five years, the groups said.

The groups noted that the federal notarization bill could be useful to marketers because it does not prohibit the sale or disclosure of the data collected during an online notarization.

(Image: jijomathaidesigners/Shutterstock)

Allison Bell

Think_Allison

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