State registers digital signature firm

Alaska is one step closer to making digital signatures a reality with the approval in late June of Digital Signature Trust as a "trusted third party" to verify that people and companies are who they say they are.

"Digital Signature Trust is the first company to do business here and we’ve just registered them," said Lt. Gov. Fran Ulmer. "It’s the next step in a multistep process."

The previous step was the approval last year by the Legislature of a law allowing digital signatures to be recognized as legally valid and enforceable. The U.S. Congress has also approved the signatures on a national basis.

Why the excitement? Because digital signatures will allow contracts to be signed and other transactions requiring signatures to go forward without putting two people in the same room -- or physically shipping a signed piece of paper from one party to the other.

According to a DST white paper on the subject, the need for legally binding signatures is the prime reason the "paperless office" has never really happened. After all, an original signature proves identity, various delivery methods ensure that no alteration occurs to the document during shipping, and yet another signature proves delivery to the proper person. It’s a lot of paperwork, but it works.

Now try that on the Internet, where every piece of data is subject to interception and/or modification, where identity theft is rampant, where it’s often difficult to determine if a message ever got to its intended recipient -- or if it got there in one piece.

Digital signatures are designed to solve all these problems.

The first step is to verify the identities of the parties to a transaction. That’s part of what DST does, according to the company’s director of government services, Karen West. She pointed to Washington, another state that has chosen DST as its certifying authority.

"In Washington, we collect the personal information and verify it," West said. "The states themselves can do it. Alaska hasn’t decided on any process -- they will probably do a little of each."

States and corporations can buy digital signatures, also called certificates, for their employees or their vendors, but certificates are issued only to individuals, West said. Certificates cost about $20, she said.

Once an individual’s identity has been verified, DST gives them a digital signature, which is really nothing more than an encryption key. To "sign" a document is actually to scramble it using your personal code. The document is then sent over the Internet, where any modification will garble the message. The person at the receiving end uses his or her own digital certificate to unscramble the message.

West said anyone who has bought something on the Internet via a secure server has used a limited type of certificate, which scrambles the information between the buyer and the seller so it can’t be intercepted. A digital signature encrypts the channel, too, she said -- but it also assures the identities of both parties.

"You know it’s and they know it’s you," she explained.

West said DST provides a warranty of $100,000 per transaction and $250,000 per certificate.

West said that her company’s strategy is to build up an infrastructure that allows transactions to occur at all levels, allowing commercial entities to do business with states and the federal government, while making sure states can communicate with one another and with federal agencies.

West said one driving force for the technology is a federal law requiring the privacy of medical records.

"State health departments and insurance companies are some of our biggest customers," she said.

Likewise, West predicts that new federal requirements for privacy in the financial services industry -- especially the mortgage industry -- will drive new customers to DST.

In Alaska, Ulmer says she’s gotten the most inquiries about digital signatures from the banking and oil industries. She expects that transactions involving oil leases with the state Department of Natural Resources will be among the first to use digital signatures.

Ulmer said that she expects the digital signatures to also be valuable for international transactions.

"It should simplify international business because we’re a big exporter," she said.

Ulmer said she expects the use of digital signatures in Alaska will start slowly and grow over time.

"Like any new technology, we’ll have to see who decides it’s in their best interest," she said. "We’ll see how it goes."

07/09/2001 - 8:00pm