I am currently experiencing Etrade's bogus security concern scam, but I am near the end of the process. My account has been unrestricted now, and hopefully it will only take 5 to 7 more days to get the accounts closed and my money pried out of their sticky fingers.
There's plenty of horror stories already posted on the difficulty of removing funds from E*Trade accounts. I don't think my own case is particularly unique. Telling all about it is like "gilding the lily" so to speak.
So my screed will be more educational in nature, and perhaps it will be helpful to Etrade's customers who have just stepped into the E*Trade nightmare.
It's helpful to understand what is currently going on. E*Trade has severe liquidity problems. They are attempting to hold onto their customer's assets as long as they can. This is not really about incompetent customer service. That's the charade. Poor customer service, (unintentional); caution (an overabundance of it) in matters having to do with fraud protection; and apparent stupidity in designing a ridiculous process that doesn't achieve it's stated goals. (This is not to suggest that the quality of E*Trade's customer service was ever very good. It's just that it is now intentionally being used to create plausible deniability by E*Trade executives in case the government regulators or the mainstream media ever wake up and smell the coffee burning)
However, it all makes perfect sense once you recognize its true goal: keeping customer's money as long they can get away with it without running seriously afoul of the SEC or OTS. (Note the shift in customer complaint topics over time. Prior to E*Trades liquidity problems that began in the latter half of 2007, the complaints were predominantly about unethical practices of surprising customers with outrageous fees that were added on without notification, and questionable execution of trades which left E*Trade a little better off and the Customer a little worse off. E*Trade was growing so fast that it didn't have to worry so much about liquidity and cash flow. It was all about revenue enhancement in earlier times. The current scam seems to have gotten started at the same time that E*Trades liquidity problems started.)
Here's what they do:
E*Trade places your account on "restricted" status based on their allegation of "suspicious activity" in your account. In my case, the "suspicious activity"
was my attempt to transfer some of my funds from E*Trade to another bank. They don't seem to like that.
Once your account has been restricted, they will tell you nothing, except that if you want access to your account you will have to send them a "Notarized Letter of Authorization", which according to E*Trade is the only way for them to "verify your identity". Expect to have your funds tied up for about 3-4 weeks. You will not be allowed to talk to any person at E*Trade except for a "fraud specialist". Don't count on ever talking to the same one twice, unless you make a lot of calls. Misinformation and outright falsehoods will be the order of the day. The game is to stall the process as long as possible, using any excuse possible. It may be possible to shorten the process to less than 4 weeks. Here are some useful recommendations:
If they ask you to fax a copy of your drivers license or other government ID to them, forget that. It is a dead end street that only wastes time. They will lose the fax, or your ID will not be legible enough, etc. Move immediately to sending them the Notarized Letter of Authorization. If they don't ask for that at first, ask if you can send that instead of a fax of your ID. This will save time in the long run, by eliminating one whole step in the process.
Don't get mad at the "fraud specialists" Always be friendly and polite with them. They have no authority whatsoever to make any independent decision about solving your problem. In fact, it is not their job to help you. They are typically young Philippine nationals who have been working for E*Trade from 2 to 6 months. They are working the "graveyard" shift in a call center located in Manila. They are generally clueless about what is really going on, and are only repeating canned responses that they have been given. One of their more frequent responses will be: "I'm sorry, but I am not allowed to give that information while your account is "restricted". If you ask them any questions, don't place a lot of stock in the answers you are given. Accuracy and truthfulness does not seem to have been a high priority in their training. Frequently, they don't really understand the question. Most of the time they also don't know what the truth is. They are just repeating what they have been told to say. Their proficiency with understanding spoken English has a great deal of variability as well. Speak in simple sentences. Their instructions from their supervisors are quite simple. They may not transfer your call to any other person or extension, no matter what. They are not allowed to discuss anything about your account with you, including why it was put on hold in the first place. Their only purpose is to repeat by rote, instructions as to what you are required to do in order to remove the restriction on your account. On your first time that you get transferred to a "fraud specialist", clarify that you would prefer to send them a Notarized letter of Instruction, if they have asked only for a faxed ID. Include in that letter your full name, address, ss#, E*Trade Acct #, Phone number, email address number and date of birth, and your instructions as to what you want them to do with your account. Make sure that the letter is notarized by a Notary Public and that it contains the notary's stamp and the notary's seal. I suggest that you get at least 3 originally notarized letters all at the same time. E*Trade has a great propensity for losing them or misplacing them for several days even though you send them overnight and get a tracking number.
Do not expect the fraud specialist to acknowledge receipt of your Notarized Letter until you can prove they did with a tracking number, and the name of the person who received it. You will rarely get the same person the next time you call in, so be prepared once you have confirmation of the document to insist that they have received it. Ask them to put a notation in the file with the tracking number, date, time and person who signed for its receipt. The next time you call in, be prepared for the next fraud specialist to claim that they have not received the document yet. Ask them to check the notes on the computer to verify it. In Manila, the document is not considered to be received until it has been scanned into the computer. On each successive call to a new fraud specialist, insist that they look in the computer file and verify that the tracking number, date, time, and person that received it have been entered in the notes.
When you are given instructions about sending the notarized letter, they will give you an address in Arlington Virginia for overnight, and a PO Box in Charlotte NC if you are sending it regular mail. DO NOT SEND IT OVERNIGHT TO ARLINGTON VIRGINIA. This will add 3 business days to the process. E*Trades process is to send all documents that are received in Virginia to Charlotte NC, where they will be scanned into the computer. This process, according to E*Trade takes 2 to 3 business days. At the very begining they may tell you that after the Letter has been received, it takes 24 to 48 hours for their "review team" to verify that "everything is in good order". That is misinformation. After 48 hours have passed, they will ask where did you send the document. If you say Arlington VA, they will then tell you about the 2 to 3 business days because it needs to be sent to NC. The 2 day part is also misinformation. They seem to have excellent quality assurance to guarantee that it will take no less than 3 days. In my case it took 7.
Anyway, you should send it via USPS Express Mail to the PO Box in Charlotte NC. When sending it Express Mail, DO NOT SIGN THE WAIVER for obtaining the recipient's signature. Until the document has been received in Charlotte, you probably won't have heard much about the reviewing to make sure it is in good order, once they confirm that the document has been received as evidenced by its having been scanned into the computer, there will be a further delay for the reviewing process. Although they can state precisely how long it takes to ship the document to NC, (not necessarily accurately however) the stock answer for "how much longer it will take for the reviewing to get completed?" will be "I can't give you a specific time for that." Don't bother trying. From here on, the best way to deal with getting the restriction removed is to call at least once a day for a status update. Make sure they annotate the file every time you call. Do not expect them to call you when they say they will, if they give you a specific day or time for the call back. What they will tell you is that once the document has been reviewed and found to be in good order, then someone from the fraud department will call you.
I believe that daily calls to a "fraud specialist", probably shortens the time it takes them to review the document and find it in good order, but I can't say for certain.
Once they have removed the restriction on your account, do not anticipate that they will have done anything else that you requested in the letter, such as wiring funds or closing the account, etc. You will need to pursue that as if you had never asked them to do anything in the letter other than to unrestrict your account. If you're in a hurry for your money, I recommend calling the fraud specialist at least twice a day, and always insist that they annotate the file with your most recent call. Here's where being friendly and pleasant is important. You want the fraud specialist to like you. This will probably insure they will do anything you ask that they haven't been specifically told not to do by their supervisor. You also don't want them to annotate the file with some additional comment that you were angry and hard to deal with. This may prejudice the next fraud specialist you speak with against you.
Forget about wasting your time trying to contact a manager in customer service or anyone higher up in the organization than one of the fraud specialists while your account remains in restricted mode. You can't do it. Here's why. No matter what 800 number you call, you will get routed to an automated attendant that will want you to put in your ss# or E*Trade account number. Once they know who you are, you go directly to jail, (do not pass GO, do not collect $200). If you don't give an account number or ss#, you can get to a live operator who will ask for the same information. Once your account number is known the operator's computer screen will have only limited information on your account. The operator will also have instructions on her computer screen that indicates she is to transfer this call to the fraud department without further ado. She may have a different name for it: "Dedicated accounts" department, or CSSG, for Customer Security Services Group, or the Maintenance department. Whatever they choose to call it, you will wind up in the Manila call center talking to a fraud specialist.
If you try to cheat, and tell the operator you don't have an account, you're a prospective customer, you can get transferred to an account rep, or some such title, usually located in the US, but he will not have the authority to transfer calls from non-customers to managers. So you will now have to fess up and give him your account number, and then just like with the operator, you're off to Manila. Perseverance is all that works. If you get to the 15th day after your account was restricted, file a complaint online with both OTS and the SEC. I'm not 100 percent sure, but I think that if you are proactively asking about your account on a daily basis, they will not keep your funds restricted for more that 30 days. I have heard that that's the threshold where the government regulators are willing to start slapping E*Trades hands.
There are stories about people who have their funds tied up for much longer than 30 days, but I think these are people who sat back and waited for promised return phone calls, which never came in, and checked back only every two or three weeks to find out why nothing had been done.
Keep a record of the time and date of every phone call and the name of the person you talked to. You will want to state these things in your SEC and OTS complaints if you have to make them. In some states it is legal to tape phone calls without notifying the other party as long as you are the other half of the conversation.
West Chester, Pennsylvania
U.S.A. Click here to read other Rip Off Reports on E-Trade