Confidential and Proprietary 1

“The road to innovation through DTM within the non-prime automotiveindustry is not a simple narrative about businesses simply needing to move beyond the comfort zone of paper.”

© eOriginal, Inc. www.eoriginal.com

Digital Transaction Management: The Road to Innovative Automotive Financing Services and Processes

Part One

Confidential and Proprietary 2

E-Contracting Solution Risks

While more than half of the automotive finance industry

utilizes an e-Contracting solution for their lending and financing processes, risks can occur when funders or buyers

won’t accept a digital transaction because they lack

confidence in the post-signature management of the

financial assets.

Confidential and Proprietary 3

Potential DTM Solutions

Now that there are a greater number of e-Signature and cloud storage solutions available, it is increasingly harder for organizations to evaluate potential DTM solutions to ensure that they provide the correct functionality, while also meeting the requirements of being legally compliant and secure.

Confidential and Proprietary 4

Firm DTM Understanding

Click on the whitepaper image above to instantly download your copy.

Nevertheless, it is essential that organizations have a firm

understanding of the laws that govern the DTM industry prior to implementing a solution. Without

this understanding, they could potentially cause unnecessary risk,

including lacking the proof of control of their financial assets.

Confidential and Proprietary 5

The Laws that Allow for Digital Transactions

The Uniform Electronic Transaction Act (UETA) and the Federal Electronic Signatures in Global and National Commerce (ESIGN) Act empower electronic

documents and electronic signatures to be used with the same effect as paper documents and ink signatures.

Click here to read the entire article on Non-Prime Times

The official publication of the National Automotive Finance Association

Confidential and Proprietary 6

In addition to the federal E-Sign Act, all but 3 states have enacted the Uniform Electronic Transactions Act (UETA) -- and the other 3 states have enacted similar laws over which the eSign Act is potentially preemptive.

The E-Sign Act did not change the basic rules of contract law, preserves underlying consumer protection laws and the consumer's right to receive certain information in writing.

Its purpose, as set forth in Section 101(a) of the E-Sign Act, was to make it clear that a signature, contract, or other record could not be considered invalid or unenforceable just because it was done in an electronic format.

Under Section 101(d) and (e), however, an electronic contract could be deemed unenforceable or invalid if the electronic record was not capable of being retained and accurately reproduced for later reference.

The Laws that Allow for Digital Transactions

In 2000, Congress enacted the Electronic Signatures in Global and National Commerce Act (ESIGN Act). Its purpose was to facilitate the

use of electronic records and signatures and ensure the validity and enforceability of electronic contracting.

Understanding eSign Law & Compliance: UCC Article 9-105

Confidential and Proprietary 7

Understanding eSign Law & Compliance: UCC Article 9-105

What does it mean to take "control" of electronic chattel paper?Under Article 9-105 of the UCC, a secured party has “control” of electronic chattel paper if the record or records comprising the chattel paper are created, stored and assigned in such a manner that each of following six criteria are met:

Authoritative copy

A single authoritative copy of the record exists that is unique, identifiable, and, except as provided in 4, 5 and 6, has not been altered

1 Assignee identification

The authoritative copy identifies the secured party as the assignee of the record or records

2 Communication & maintenance

The authoritative copy is communicated to and maintained by the secured party or its custodian

3 Assignee modification

Copies or revisions that add or change the identified assignee of the authoritative copy can only be made with the participation of the secured party

4 Copy Identification

Each copy of the authoritative copy (or any copy of a copy) is readily identifiable as a copy that is not the authoritative copy

5 Copy revisions

Any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision

6

Alterations

Creation | Storage | Assignment

The Laws that Allow for Digital Transactions

Confidential and Proprietary 8

The fact that no case law exists demonstrates that admissibility and enforceability of electronic

contracts are not really in question.

However, that does not mean lenders and borrowers will view every solution as trustworthy.

The Laws that Allow for Digital Transactions

Confidential and Proprietary 9

Understanding e-Contracting Enforceability

With a solid plan and the right technology, any organization can

ensure that their digital automotive agreements are as legally enforceable as their paper

artifacts, while also providing the solution provides confidence to

existing and future investors, funders and buyers.

Confidential and Proprietary 10

Understanding e-Contracting Enforceability

Successfully managing electronic assets requires an organization to maintain verifiable control over the document. In the traditional handling of assets, physical possession established ownership, and this distinction was fairly

simple: whoever held the paper with the ink on it held the asset.

Confidential and Proprietary 11

Understanding e-Contracting Enforceability

Confidential and Proprietary 12

Stay Tuned for Part Two

Be sure to check back for the second and final part in this mini series on The Road to Innovative Automotive Financing Services

and Processes.

To read the full article on this subject in Non-Prime Times, click here

Confidential and Proprietary 13

About UseOriginal, Inc., founded in 1996, is the standard for eAsset® Management services for any business that needs the ability to verify secure, legally compliant and enforceable electronic asset documentation.

eOriginal provides the maintenance, control and use of critical documents that have an intrinsic value, such as negotiable instruments, in a fully electronic environment, storing and protecting these assets throughout their entire lifecycle, including post signature execution. By maintaining the authenticity of original documents, the identity of the signatories, and the integrity of the content, eOriginal provides customers with the capability to realize the true benefits of fully electronic transactions and the resulting business process improvements.

For more information about us, please visit www.eoriginal.com or contact us at info@eoriginal.com

Visit Us