The risk of reputational damages, legal sanctions, and financial losses due to fraudulent AI-generated signatures is no longer a distant possibility but a present threat that continues to grow with every advancement in AI technology.
Businesses that use generic eSignatures in contract execution processes face the highest exposure to forgery risks, with AI rapidly improving in its ability to mimic the most complex handwritten signatures for use in critical business documents.
Here, we have detailed the various implications of fake AI-generated signatures in business, exploring tools and strategies you can utilize to keep them at bay.
The near-perfect replica, drawn by AI
In 2016, scientists at the University College London (UCL) developed an AI tool called “My Text in Your Handwriting,” which can analyze a sample of a subject’s handwriting and allow third parties to accurately replicate new texts saying anything they want, in the subject’s exact handwriting.
This software had several positive applications, such as helping stroke victims share their thoughts in their original handwriting without being limited by their disability.
To test the effectiveness of this tool, the developers invited several people to distinguish between handwritten notes and those generated by the software. As you would've guessed, it proved to be a difficult task, fooling the invitees 40% of the time.
Considering how convincing the AI-generated texts were, there were concerns that bad actors could weaponize the tool for various malicious motives, such as forging signatures on legal documents.
AI has since evolved in capabilities and sophistication. However, the threats have yet to go away.
It is important to note that people typically choose AI-generated signatures over generic eSignatures in digital documents mainly for their convenience and efficiency. It is challenging to replicate handwritten signatures in digital interfaces primarily due to the intricacies of handwriting and the uniqueness of each person's signature style.
But with AI, you could train a tool once, and it would produce an almost-exact digital copy of your signature for use in all your documents.
But this also means that bad actors can easily find your signature anywhere and clone them using AI tools for the purpose of signing documents and spreading false information without your knowledge and approval.
The implications of fraudulent AI-generated signatures in business documents
AI-generated signatures may seem convenient, but without the right security considerations, they can expose organizations to a wide variety of risks. When fraudulent AI-generated signatures are found in business documents, the repercussions can extend far beyond the convenience of automation, putting companies at financial, reputational, and legal disadvantage.
#1 Reputational damage
Trust is the bedrock of every business relationship, and when stakeholders discover that business contracts have been executed using forged signatures, the damage to the organization's reputation can be irreparable. Clients, partners, and investors may become wary, and the trust, once established, may crumble, impacting not just current but also future business prospects.
Also read: Persuading Clients to Embrace E-Contract Signatures
#2 Legal repercussions
The presence of forged signatures in a contract can eliminate the legal validity and enforceability of the document. A forged signature not only raises doubts about the authenticity of current and future contracts but can also lead to heated disputes.
Additionally, if accused of forgery, organizations may find themselves entangled in legal battles, which can be financially burdensome and harm their standing in the eyes of the law. The situation can worsen if the plaintiff successfully proves the organization’s contribution to the incident by way of negligence or active involvement.
#3 Financial losses
When a business document is compromised, it can result in financial losses due to unauthorized transactions, invalidated agreements, or obligations not met as a result of contract disputes.
Rectifying such situations may necessitate costly legal proceedings, which can further drain financial resources. In addition to this, there may be insurance premiums or other settlements to consider, which will add another layer of financial burden for the organization.
Keeping your business safe with digital signatures
AI-generated signatures are a level above generic eSignatures, but they typically don’t come pre-fitted with reliable security against sophisticated forgery or unauthorized use.
So, while you may enjoy the convenience of having your exact handwritten signature on your documents, your business could be at risk of forgery attacks if you do not implement added security measures like encryption, access controls, and version tracking.
That said, digital signatures (or Advanced Electronic Signatures—AES) are a well-established and preferred method for eSigning in business due to their robust security and authentication mechanisms, as well as compliance with various legal and ethical standards.
They’re designed to protect contracts and other business documents by:
- Capturing the identity of each signer using their IP address, email trail, timestamp, and more.
- Maintaining an audit trail of each signing process to ensure transparency and accountability.
- Verifying the integrity of the document using cryptographic techniques to detect any unauthorized changes or alterations made to the content before and after it has been signed.
That way, you will benefit from the speed and convenience of signing documents electronically without compromising on security and exposing your business to significant risks.
Also read: A Quick Introduction to eSignatures
“Now is the perfect time for in-house counsel to focus on how best to use electronic signatures at your company. If you are already using them, that’s even better, but just make sure you are truly up-to-speed on the laws in your jurisdiction and that you have the right systems and procedures in place.”
~ Sterling Miller CEO and Senior Counsel for Hilgers Graben PLLC
Ten Things: Electronic Signatures (What In-House Counsel Need To Know)
SpotDraft: Delivering a well-rounded approach to digital signatures
“I have seen a demo of SpotDraft's CLM technology and they should be on your short list of vendors to talk to about a contract management system.”
~ Sterling Miller CEO and Senior Counsel for Hilgers Graben PLLC
Ten Things: “Cool Tech” for In-House Counsel (2022 Edition)
SpotDraft is a Contract Lifecycle Management (CLM) platform that streamlines end-to-end contract management processes, from the initial drafting to the execution and tracking phases.
Because signatures are mission-critical to the legal validity of contracts and business documents, SpotDraft incorporates the industry’s best mechanisms in fostering secure, convenient, and efficient digital signing processes for individuals and organizations.
Here’s a breakdown of how it achieves this:
#1 Multiple eSigning options
SpotDraft offers a variety of ways to sign documents on digital interfaces. If you prefer a more basic signing process, you can use its textbox method or the click-to-sign option. However, if you have a preference for personal touch and aesthetic appeal, you can utilize its handwriting functionality to replicate your actual handwritten signature.
Additionally, SpotDraft has an upload feature, which you can utilize to upload a picture of your paper-written or AI-generated signature into your documents.
This flexibility allows you to tailor your document signing experience to your specific needs and preferences.
Also read: Contract Signing Unveiled: A Step-By-Step Guide
#2 Authentication
SpotDraft has an easy yet reliable way of authenticating the identity of signatories to a legally binding document. Whenever a signature request is generated, the platform sends a unique link to the signee's email address. Upon clicking the link and accepting to sign the document, the signee's email ID, IP address, and timestamp are generated as part of the document's audit trail.
#3 End-to-end encryption
SpotDraft ensures that every document shared between signatories is fully encrypted using Public Key Infrastructure (PKI). This uses cryptographic algorithms alongside public and private keys to protect your documents from unauthorized access and tampering, providing peace of mind throughout the signing process.
Its advanced cryptographic encryption is powered by Entrust, an industry-leading Digital Signature Certificate (DSC) provider. Through this service, you can easily identify if a contract has been tampered with.
#4 Mulitple signatories
SpotDraft offers the convenience of adding as many signatories as you want to your contracts. It also allows you to specify the order in which you want them to sign.
#5 Central audit log
SpotDraft’s eSigning tool includes a comprehensive trail of every change that has occurred in your document. This is shown on a separate page at the end of your legally binding document, covering details like the signee’s IP address, signature timestamp, and email address.
The central audit log serves the purpose of providing a transparent and legally verifiable record of all actions and interactions related to the document, ensuring accountability and compliance with regulatory requirements.
#6 Custom workflows
SpotDraft allows you to set simple and advanced eSign workflows for your documents. Thus, you can set automation rules for signature requests to be pushed to the various signatories in sequential or parallel order.
You can also set triggers that automatically send a copy of the signed document to specific email addresses upon execution.
Also read: Contract Workflow: Examples
#7 Compliance with regulatory standards
SpotDraft is compliant with major regulatory standards like eIDAS, ESIGN, and ECA. Generally, digital signatures are considered compliant when they adequately reflect the signatory's intent to sign and consent to be bound by the terms of the agreement.
Additionally, all parties involved must retain copies of the digitally signed document, and there should be sufficient audit trail of all related activities for evidentiary purposes.
SpotDraft complies with these fundamental standards by giving signatories the opportunity to decline or accept signature requests (intent), requiring signatories to consent to be bound to the terms of the document (consent), and ensuring that a copy of the signed document is sent to all parties involved while keeping a copy in its central repository.
Also read: Are Electronic Signatures Legal?
Final takeaway
The convenience and efficiency of AI-generated signatures are undeniable, but they come with their own set of vulnerabilities. To protect your business and ensure the integrity of your documents, prioritize using well-established digital signature platforms with robust security and compliance mechanisms.
This not only protects your business documents from signature forgery attacks but also helps you maintain the trust of your stakeholders and safeguard the future of your organization.
Want to get a tour of SpotDraft CLM? Click here to get a demo.
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