WARNING: Avoid E-Trade / Use at your own risk

I think this has been covered before as I have read this somewhere (I didn't take it serious) but this is something all of us should understand can happen at any time, to anyone. Our E-Trade online savings account was/is frozen for no apparent reason. You really don't even know it's frozen until something adverse occurs -- in my case a reversed ACH and a bounced 30k check. Even today if I log-on my balance appears as 'available'. My wife and I have both called several times, answered a billion security questions and she even did a chexsystems question type interview -- but... account still frozen. This is absolutely unbelievable. In fact, if someone told me this I would think there's more to the story. In the last 3-4 weeks, I had two transfers in totaling about 41k and one transfer out of 7.5k. This is considered suspicious and needs thorough investigation by their fraud department.

This whole thing is the biggest joke. Not only is it ridiculous but to think they can and will do this without any communication. I am super upset about the returned check, fees, hassle, etc. After googling a little, I see this is a common occurrence with E-Trade. They are jerking me around big time. Do they open themselves up to any legal liability for holding funds without any probable cause?

The question is, is this ACH amounts/frequencies regular behavior for you? If yes, then I completely sympathize with you, if not, it is not too surprising it triggered a fraud alert. I do however agree that E-trade needs to work on how they deal with cases like this. Including better customer notification and a more timely method to take care of the problem. There is no reason a quick phone call and maybe a fax and this should be over.

That account is relatively new -- opened it for the $25 bonus and to use their "Quick Transfer" feature. That's another thing -- they boast about their ACH system then lock down your account if you use it.

Yes, how they handle this is a major problem. Of course we've met any reasonable identity standard ten times over. They now demand we mail in some letter to them. As if I were some major crook, I couldn't handle mailing a 'fake' letter. I spoke with ONE person that was intelligent/articulate and she wasn't able to explain what E-Trade was doing either. She was nice and presumably trying to help me so I appreciated that.

DAWG said: That account is relatively new -- opened it for the $25 bonus and to use their "Quick Transfer" feature. That's another thing -- they boast about their ACH system then lock down your account if you use it.

Yes, how they handle this is a major problem. Of course we've met any reasonable identity standard ten times over. They now demand we mail in some letter to them. As if I were some major crook, I couldn't handle mailing a 'fake' letter. I spoke with ONE person that was intelligent/articulate and she wasn't able to explain what E-Trade was doing either. She was nice and presumably trying to help me so I appreciated that.

Don't blame ETrade. Blame the government. Banks and financial institutions are required to file SARS reports for any suspicious activity. When you opened your etrade account and used it to wash a significant amount of money, they are required to report it. In addition, they are legally not allowed to inform the account holder or subject of the SARs report that they filed a report. (This is probably why you're not getting a clear message from them)

Failure to file such report can subject ETrade to fines between 25-100K / incident. I am sure they are covering their asses in doing so.

Just follow their instructions and contact your congressman/legistlator to change the rules if you don't like it.

Read through the guidelines here: http://www.fincen.gov/statutes_regs/guidance/pdf/msb_prevention_guide.pdf

It is illegal to tell any person involved in
a transaction that a SAR has been filed.
Maintaining the confidentiality of SARs
will prevent suspected individuals involved
in criminal activity from structuring their
activity in such a way as to evade detection
by law enforcement. It also will help
protect the MSB filing the report. A SAR
and/or the information contained in a SAR
must only be provided to FinCEN or an
appropriate law enforcement or supervisory
agency when requested.

What is “Suspicious Activity?”
A SAR must be filed by a covered MSB
when the MSB knows, suspects or has reason
to suspect that the transaction or pattern
of transactions is suspicious and involves
$2,000 or more. A suspicious transaction is
one or more of the following:
■ Involves funds derived from illegal
activity, or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity.
■ Is designed to evade BSA requirements,
whether through structuring or other
means.
■ Appears to serve no business or
apparent lawful purpose, and the MSB
can determine no reasonable
explanation for the transaction after
examining all available facts.
■ Involves use of the money services
business to facilitate criminal activity.

DAWG said: I have had bank accounts for about 20 years now. I have transferred hundreds of thousands (at one time) back and forth, etc, etc. I have never had any problem that wasn't easily corrected by a phone call or maybe two. This isn't normal bank behavior. If you want to use E-Trade and you think this is normal, knock yourself out.

But you've said you did this within a short period after opening the account. They don't have any prior banking history with you. Once you've established a pattern, it's no longer considered "suspicious." What is suspicious is opening a new account and using it as a conduit to move money around.

Not trying to be a jerk but I think I need to restate my original post. I just wanted everyone that reads this forum to know if they have an E-Trade account that it may be locked down for little or no reason and that they will not know it. If you want to argue that 3 ACH transactions in a month is suspicious then whatever but many of us on here do that (or many more) and they need to be aware of what can happen to their money. Pretty simple and not much to argue about.

LH2004 said: tazzy531 said: Don't blame ETrade. Blame the government. Banks and financial institutions are required to file SARS reports for any suspicious activity. When you opened your etrade account and used it to wash a significant amount of money, they are required to report it. In addition, they are legally not allowed to inform the account holder or subject of the SARs report that they filed a report. (This is probably why you're not getting a clear message from them)I have no problem with financial institutions telling the government about my activity. I would have a huge problem with them not giving me access to my own money, which is what DAWG is complaining about.Yeah, I doubt that a SARS report was filed for either DAWG or myself. The problem is twofold: freezing the account without notification and holding one's money hostage for an unnecessarily extended period of time until the freeze is removed. If this has not happened to you, consider yourself lucky and be aware that it's a possibility in the future. If you think that making a handful of ACH transactions per month is suspicious activity, feel free to continue to use e*tard to your heart's content but don't come complaining if the same thing happens to you at some point.

I wondered when this would happen. As consumer's we're pretty insulated from $billions$ financial institutions lose due to fraud every year. And with tough times, they can no longer afford those loses. Customer service is now going to suffer as they implement new, ridiculous fraud countermeasures like this. We really need to orchestrate a world-wide financial embargo against Nigeria. I mean, what do they bring to the global marketplace other than fraud?

e-trade isn't alone. I used scottrade and about 2 years ago they suspended my account for "suspcious activity" (I tried transfering in money from another online account using the checking #/acct# but they didn't accept that type of transfer from that institution...) and it took an act of god to unlock it (and they told me rudely if anything funny happens again they will shut it down). I wouldn't have been suprised if they sent a federal marshall to shoot my knee-caps off...

Thanks OP for pointing out this very fact. I have been using Etrade mainly because of their fast ACH and I have been Xfering large amount of money around (excess of $30000) every other week or so (mainly becuase of these teasing Rewards Checking accounts). I will be really pissed if I shcedule a payment to my credit card for balances to paid off after the end of BT promo using their account and the payment was returned unpaid becuase of this freaking freeze. I think it's better not to rely on them for the final payment or atleast paid the balances due as soon as statement is closed.

goat6500 said: I wondered when this would happen. As consumer's we're pretty insulated from $billions$ financial institutions lose due to fraud every year. And with tough times, they can no longer afford those loses. Customer service is now going to suffer as they implement new, ridiculous fraud countermeasures like this. We really need to orchestrate a world-wide financial embargo against Nigeria. I mean, what do they bring to the global marketplace other than fraud?

Oil.

kichubhai99 said: I am still battling with them to close my accounts with them. as strict thay are the closing is also not simple with them. thye need things notarised wtc. already i am getting dormant notices and my IRA is blocked with them. They are not customer freindly as you cannot goto any barnches and get things closed. i will have to travel 200 miled to get to the nearest branch. i will try closing the account before it is frozen for 24 months.You've had an account frozen for 2 years??!!

Maybe E-trade bank's fraud dept is being outsourced to Paypal.

i think etrade has been used by money laundering gangs before. They have been busted by Feds on it and paid fine. So, they are extra careful. Just by chance did any of you having trouble also use a RSA ID to login?. I am thinking if use the id, such headaches might be reduced.

DAWG said: Do they open themselves up to any legal liability for holding funds without any probable cause?

They're not arresting you, so they don't need probable cause.

Certainly an argument for maintaining "banking diversity". I have read similar horror stories about other banks on FWF, so this is not exclusive to E*Trade.

I have had an E*Trade brokerage account for a long time, and opened up savings and checking accounts with them a couple of years ago. I regularly make transfers in and out for $50000+ and have never had a problem. I use E*Trade as my hub account because their ACH transfer service is really good. When I closed on my house last year, their customer service group was very helpful in getting the wire set up to transfer funds to the title company, though it took a little time on the phone to set it up because the first rep I talked to said they could not wire funds to an third party account, that my name had to be on the receiving account. However, he transferred me to someone in the "premium account group" or something who was able to get it done.

As happy as I've been with E*Trade, though, I maintain checking accounts with two other banks (including Wells Fargo so I have B&M access on those rare occasions where I need it), plus I have a money market/CDs at Corus Bank and PenFed, and I have two other brokerage accounts (Fidelity and Wells Fargo). I like to keep my funds spread out a bit, even though I'd probably get some additional benefits if I consolidated all my accounts with one firm. When I read stories like the one from OP (even though the new account probably had a lot to do with it), it reminds that financial diversity has its benefits, even though it is a pain to keep up with balancing all my accounts each month.

EDITED TO ADD: I do use E*Trade's RSA ID, not sure if that makes a difference.

Please don't take this post as "defending" E*Trade -- the biggest thing I see at fault here is lack of communication/response to you once you initiated the complaining. Locking the account though actually in many ways gives me confidence in them.

What you may not realize is the following. Day in day out every bank is under attack from multiple technically savvy entities. The criminals are determined and to be honest have very little to fear as they are typically located outside the US - Good luck getting that guy in Iran who rented out that hacked account or botnet for the day... They use all sorts of attacks and in the end E*Trade ultimately has to make decisions that will affect legitimate people. Day to day that have to balance security with customer experience and sometimes security will win out.

To your specific example, I can see a half dozen scenarios where you personally did nothing but your account was still locked. For instance if you were on a dynamic IP address and they detected your IP or range of IPs around it attempted to break in to any account at all, all accounts it tried to access would subsequently be locked down.

As to communications, I know many systems have policies to lock out for a period of time to be unlocked when they believe the attack is over -- they typically won't communicate this as they don't want to cause fear. However when you did make contact with them, they should have maintained a much more robust communication.

Just my $0.02.

where is codename47 when you need him?

jeepfun said: Please don't take this post as "defending" E*Trade -- the biggest thing I see at fault here is lack of communication/response to you once you initiated the complaining. Locking the account though actually in many ways gives me confidence in them.

What you may not realize is the following. Day in day out every bank is under attack from multiple technically savvy entities. The criminals are determined and to be honest have very little to fear as they are typically located outside the US - Good luck getting that guy in Iran who rented out that hacked account or botnet for the day... They use all sorts of attacks and in the end E*Trade ultimately has to make decisions that will affect legitimate people. Day to day that have to balance security with customer experience and sometimes security will win out.

To your specific example, I can see a half dozen scenarios where you personally did nothing but your account was still locked. For instance if you were on a dynamic IP address and they detected your IP or range of IPs around it attempted to break in to any account at all, all accounts it tried to access would subsequently be locked down.

As to communications, I know many systems have policies to lock out for a period of time to be unlocked when they believe the attack is over -- they typically won't communicate this as they don't want to cause fear. However when you did make contact with them, they should have maintained a much more robust communication.

Just my $0.02.
When my account was frozen, I was using the same computer and same browser with the same internet connection and IP address as I had used for a month or so previously. While they stopped execution of scheduled transfers and external ACH pulls/pushes, they did not lock my login credentials. That means that if someone actually had gained access to my account, they could continue to login, go to my external accounts page, record my account numbers at other institutions, go to the account summary, view my contact information, etc. They also did not tell me why they froze the account, or ask any security-related questions when they unfroze my account after receiving the notarized letter of authorization (on which I stated that I wanted to know why they froze my account and wanted to be compensated for the loss I suffered as a result of their freezing my account). IMO, these factors all seriously undermine the legitimacy of an actual security concern motivating the account freeze.

.

Well Surprisingly , They had frozen my spouses account simultaneously apparently because she lives in the household. Well i love there security it is the TOP OF THE LINE and which is very good. But to unfreeze it they make a hell lot of deal like sending a letter attested by another bank etc. I would not mind that also but the problem is even if i want to close the account it will take more than 2 weeks or so more that the time taken to open it. I had call other bank they close it in a second. There secuirty dept is not reachable and can be done over tha mail only whcich is why it is very upsetting.

i will close down my account before 24 motnhs get effective.