Security News > 2006 > January > ETrade offers online transaction safety guarantee
http://www.computerworld.com/securitytopics/security/story/0,10801,107865,00.html By Todd R. Weiss JANUARY 19, 2006 COMPUTERWORLD ETrade Financial Corp. is now offering wide-ranging fraud and bill payment protection to customers that use its online brokerage and banking services to guard against user losses and bolster the safety and reputation of its services. In an announcement Tuesday, the New York-based company said its new ETrade Complete Protection Guarantee will provide full coverage against cybertheft losses for its online brokerage, banking and lending customers, effective immediately. The guarantee is in addition to the company's existing Web site security and procedural safeguards for online transactions. Under the policy, ETrade Securities LLC or ETrade Bank will cover the full amount of any customer account losses that occur through unauthorized online activity. In addition, if a customer's brokerage, banking or loan payment is not sent as instructed, all related fees, penalties or finance charges will be refunded. The company also said it will not sell a customer's personal information to third-party marketers for any purpose. "Consumers should feel that their money is safe," said spokeswoman Pam Erickson. "Whatever we can do [to encourage that safety] ... we're going to do." According to an ETrade-commissioned study of 507 adult ETrade customers by research company Insight Express, 84% of the respondents see online fraud as a serious problem, while 77% believe the primary responsibility for online safeguards is with financial institutions. For ETrade, however, the actual losses from online cybertheft have been relatively small in recent years, Erickson said. In 2000, the company lost an amount in the tens of thousands of dollars from fraud, she said. Losses in 2005 were less than $2 million. Consumers think the problem is much larger, however, so the company is working to bolster consumer confidence with the new program. "If consumers see it as a problem, it may preclude them from putting their money into online accounts," Erickson said. "We want to preclude that conclusion." Brokerage accounts, unlike bank accounts, aren't protected by federal banking insurance programs under current law. The move by ETrade makes sense, according to several analysts. "I think that as word gets out, it will definitely help them acquire new customers," said Avivah Litan, an analyst at Stamford, Conn.-based Gartner Inc. "It is a bold move -- consumers don't realize that theyÂre not protected" under current law if someone steals money from their online brokerage account. "This is the kind of protection that people are looking for. Consumers are very nervous." Previously, if fraud occurred, consumers could only hope that their brokerage firm would reimburse them for any losses, even though it would not be required legally to do so, she said. Dan Keldsen, an analyst at Boston-based Delphi Group, a Perot Systems Co., called it a "fantastic" step for ETrade. "I just hope that this means that the other online brokerages will follow suit. It's neat to see that they're taking a proactive stance, at least protecting the users." _________________________________ InfoSec News v2.0 - Coming Soon! http://www.infosecnews.org
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