(Updated 6-21-19 with updated information on state remote notarization laws. Please see sections in bold below for more details.)
Webcam notarizations have become the hot-button, Notary issue of the 21st century.
The debate started five years ago when Virginia enacted controversial legislation that permitted notarizations to be performed using webcam technology over the internet. The move sent shockwaves through the industry. The process seemed to violate the most essential element of any notarization: that the signer physically appears in the presence of the Notary at the time of the notarization.
But since that tumultuous time in 2011, the atmosphere surrounding webcam notarizations has gradually begun to change. Last year, Montana became the second state to authorize webcam notarizations, and others are testing the waters.
Still, the movement toward webcam notarizations remains in its infancy. There are only 127 Notaries in Virginia authorized to perform webcam notarizations for signers anywhere in the world. (Update 6-21-19: As of June 2019, several more states have authorized remote online notarizations in their laws.) And many regulators, business entities and Notaries remain leery, fearing the potential for fraud. To date there are many unanswered questions:
- Is it wise to redefine what it means to personally appear before a Notary?
- How will audio-video technology affect a Notary’s ability to properly identify signers and determine their willingness and awareness?
- How will it affect their ability to detect potential warning signs of fraud?
- How secure and reliable is the technology?
Identifying Signers Via Webcam
The heart of the debate lies in the question, can Notaries carry out their essential, fraud-fighting duties via webcam technology as well as, or better than, in person?
“From my experience, a webcam notarization provides superior evidence of signer’s identity, willingness and awareness to sign and the fact that they did sign,” said Timothy Reiniger, Director of the Digital Services Group of Virginia-based FutureLaw. To its credit, Virginia recognized that forgeries could easily be perpetrated if it allowed an individual appearing before a Notary by webcam to hold up a paper identification card to the camera as proof of identity. Clearly, a more secure method of identifying signers for these notarizations was needed.
While Virginia eNotaries are permitted to use personal knowledge and credible identifying witnesses to verify a signer’s identity, a new method allowed under the law is “knowledge-based authentication”, or KBA, which is used by many companies offering webcam notarizations. With a KBA, an individual usually provides their Social Security number, which is used by an identity services provider to compile challenge-response questions from various credit bureau databases. The individual is then asked to answer at least five questions related to their personal histories that only they would know, and they must answer a certain number of them correctly within a short period of time. If they fail, another set of questions is randomly generated. If they fail a second time, the Notary refuses to perform the notarization.
“The KBA process required by Virginia law is considered to be highly secure,” said Pem Guerry, Executive Vice President of SIGNiX, a company offering webcam notarizations. “These are not questions anyone can research, like ‘what is your mother’s maiden name.’”
But not everyone is in favor of KBA, as it has certain limitations. “There are serious questions about the veracity of KBA,” said Ozie Stallworth, Electronic Notarization Analyst and Director for the North Carolina Secretary of State’s Office, noting that hackers have breached many databases that supply information to KBA systems.
KBA is widely used by government agencies to verify people’s identities. For example, 48 states use a company called VitalChek to process online requests for copies of vital records, such as birth certificates. And VitalChek relies on knowledge-based authentication to identify customers. KBA systems, however, are only useful for identifying residents of the U.S., Canada and some European countries with established credit histories. KBA is not able to ID other foreign citizens and many young adults who lack credit histories.
Determining Willingness And Awareness
As difficult as it is to verify the identity of a signer, determining their willingness and awareness is arguably harder because of the limitations of what can be seen on camera. The essential argument is that being in the physical presence of a signer makes it easier for the Notary to pick up signs that something is amiss.
This is a particularly sensitive subject given the ongoing problem of elder financial abuse, where relatives or caregivers are pressuring or even tricking the signer. While Notaries are not expected to be experts in detecting abuse, they are expected to make a layperson’s common-sense judgment.
Proponents argue that the webcam exchange readily allows a Notary to assess the signer’s willingness and awareness. Any advantage lost by not being in the physical presence of the signer is more than made up for by the fact that Notaries are required to keep a recording of the notarization — for five years in Virginia and 10 in Montana. “If there is a dispute later, people can look at the recording and confirm the Notary’s assessment,” Reiniger said.
Reiniger added, however, that some best practices may need to be developed for webcam notarizations to help Notaries improve their ability to spot signs of duress or undue influence.
Living Up To The Hype
For webcam notarization to bring the same level of trust and reliability that an in-person notarization has, the technology behind it must be reliable and secure. Virginia is trying to establish that trust by requiring that webcam notarization technology meet the same security standards used by the state’s criminal courts. One of the reasons webcam notarization is gaining traction is the “vast improvement of the devices people can use and capabilities of those devices to do business,” Reiniger said.
As for security, proponents place enormous trust in the video recording Notaries are currently required to keep. “Studies have shown that one of the strongest deterrents to identity theft is to record the transaction,” said Adam Pase, Chief Operating Officer of Notarize.
Stallworth pointed out, however, that the technology currently exists to manipulate a video of another person. He pointed to a recent YouTube video that showed a young man manipulating an image of former President George W. Bush. The result was somewhat awkward and clumsy at points, but it’s not hard to imagine how much better it will be in a few years. “When you talk about the explosion of cybercrime, criminals are always a step or two ahead,” Stallworth said.
“Every time you do sensitive transactions online, you add some risk,” acknowledged Guerry. “One of the advantages of our technology is the secure protection of data, digital identities and notarized documents.”
Why Now?
The movement toward webcam notarization took root in 2011, when Virginia passed a law allowing its Notaries to satisfy the personal appearance requirement via online video-conference technology. A Virginia electronic Notary is allowed to notarize documents for anyone anywhere in the world.
- John Kenneth Cole was one of the first Notaries in Virginia to perform webcam notarizations. Here are his thoughts about this new technology.
After Virginia passed its law, many states, including California, Colorado, New Jersey, Oklahoma, Oregon, Ohio and Wisconsin, issued public statements that webcam notarizations are prohibited and signers are still required to physically appear before Notaries. Iowa went even farther. A 2013 law included a provision that notarizations performed in another state would only be recognized in Iowa if the signer physically appeared before the Notary or notarial officer. In West Virginia, a new law explicitly states an individual does not appear personally if the appearance is by video or audio technology. (Update 6-21-19: Iowa, Ohio and Oklahoma have now enacted laws authorizing remote online notarizations.)
But momentum for webcam notarizations shifted last year when Montana became the second state to allow them — although in a more limited form. Then Florida enacted a law allowing certain law enforcement and correctional officers to administer oaths using electronic means. And the Louisiana legislature passed a resolution to study eNotarization, including the use of audio-video technology. Two other states – Texas and Maryland – introduced webcam eNotarization bills, but they failed. (Update 6-21-19: Florida, Montana, Maryland and Texas have now enacted remote notarization laws.)
As a result of these actions, the Uniform Law Commission — a non-partisan organization of attorneys — is preparing an update to its Revised Uniform Law on Notarial Acts (RULONA) for approval this July that includes provisions allowing webcam notarizations for individuals residing outside of the United States. In April this year, the National Association of Secretaries of State established a task force to examine the issues and policies surrounding webcam notarizations. “In addition to reviewing the merits of physical presence versus virtual presence, state policymakers must also address the potential validity and interstate recognition of remotely e-notarized documents,” said Kentucky Secretary of State Alison Lundergan Grimes, who also serves as task force co-chair.
Predicting The Future For Webcam Notarizations
So what does all this mean for Notaries? How soon, if at all, will webcam notarizations become widely accepted? Will your services be more in demand or less? Who will it affect more: mobile Notaries or office Notaries? There’s no clear answer.
What is clear is that the technology isn’t exactly taking off yet. Virginia currently has only 127 commissioned electronic Notaries — out of an estimated Notary population of 114,000. But the technology is here, and the initiatives of NASS and the ULC suggest that it is being taken seriously.
Webcam notarization could be hugely convenient and potentially much cheaper for businesses. Companies that need a large number of documents notarized could use it to consolidate their operations. Some companies might even outsource their notarial needs to remote Notary call centers.
Webcam notarization could also open up new opportunities for self-employed Notaries. John Cole, one of the first Virginia Notaries to start performing remote notarizations, discovered there’s a sizeable demand for webcam Notary services among U.S. citizens abroad. Of course, self-employed Notaries may have to change their business model. There won’t be travel fees, but there also won’t be travel expenses. And if every document is in digital form, there won’t be printing costs. But there will be the expense of storing all the data. Currently, the fees Virginia Notaries can earn for a webcam notarization range from as little as $5 — depending on the company they work with — to $25, the maximum allowed under state law.
Perhaps the biggest obstacle facing the growth of this technology is its acceptance by mortgage lenders and government regulators of the lending industry. Without guidance from the Federal Housing Finance Agency and the U.S. Department of Housing and Urban Development, mortgage lenders are afraid that they will be unable to sell their loans to the secondary mortgage market, said Kathleen Murphy, President and CEO of the Maryland Bankers Association, testifying before a Maryland legislative committee considering a webcam notarization bill this year.
The hesitation over using webcam notarizations for mortgages demonstrates just how touchy and complex this issue is. In the next year the National Notary Association will publish its first standalone Model eNotarization Act, which will include an in-depth chapter on webcam eNotarizations. A panel of experts including state, federal and industry officials, as well as Notaries, have joined the MeNA review committee to help establish these standards.
“We are putting a lot of focus on this section because of the seriousness of the issues that need to be resolved,” said NNA President and Chief Executive Officer Tom Heymann. “We believe the standards we are establishing, with the help of the review committee, will create a foundation for secure webcam eNotarization systems that everyone can trust.”
Michael Lewis is Managing Editor of member publications for the National Notary Association.