E*Trade Problem

First, a December 22, 2005 letter from us to E*Trade about some problems we had transferring money to ourselves: they lost two wires. In our letter I have removed individual names and, of course, our account number. (Rubouts like '****' or 'xxxx' do not retain identity across paragraphs! Hopefully they do retain identity within paragraphs.)

Second, short details of the Better Business Bureau case we filed when writing the letter.

Third, E*Trade's reply of 31 January, granting our requests for reimbursement. That much is satisfactory, and certainly positive and commendable from a large company, though it falls rather short of an apology and admission of wrongdoing. They don't explain why they have such trouble completing wire instructions, nor why one of their managers swore that the money was not at the Bank of NY, when in fact, it was, etc. We're still looking into where the $137 he claims was credited on 29 September appeared. Finally, since we made them read back the second wire, we know it started with all the correct information, making us wonder where in their system they lost it.

                                                Charles R. Twardy
                                                38 Roberts St.
                                                Glen Waverley, VIC 3150
                                                Australia
                                                December 22, 2004

(Name Withheld)
E*TRADE Securities LLC
P.O. Box 981355
West Sacramento, CA 95798-1355
U.S.A.

Re:  Lost wire transfer, account xxxx-xxxx (now xxxx-xxxx)

Dear Mr.  (Withheld),

A few months ago you found a pair of missing wire transfers, a total
of $6,000.  They had been missing for two months, and it seems that
before you, no one was doing anything.  My wife and I appreciate your
efforts.  However, E*Trade has yet to explain where the money was, or
to offer to reimburse even the original service fee, let alone our
phone calls etc.  Perhaps you could see that this request finds the
right person?

I am going to recount the history of this attempted transfer, to
impress upon your company that something was truly mishandled, and
perhaps to show an endemic management problem.  Let me be clear about
one thing: the front-line representatives are not to blame.  They were
usually shocked that nothing had been done, apologized deeply, and
notified their managers.  Generally these managers said they were
"working on it" even when later calls showed no one had been assigned
to the case.

History

We tried unsuccessfully to send two wires from our E*Trade account to
our credit union in Australia.  We do not have records for all of the
calls we made to E*Trade, but here are some.  Please note that our
dates are probably one day in advance of E*Trade's dates.

On July 15 we sent a wire which arrived within 2 business days.
Excellent.  On 6th August we sent a wire for US $2800.  That wire
never arrived in our Australian account, because the representative
(xxxx) who sent the wire left off part of the necessary information
(the final destination, our credit union) and only included the
intermediary agency (Credit Union Services Corp.  Australia) despite
our specific repeated instructions to include both.  (Those
instructions included the suggestion to look at the previously suc-
cessful July 15 wire.)  When it was overdue we asked E*Trade to find
it.

On the 11th a representative put in a request for research, advising a
48-hour turnaround.  On the 12th, a trace-funds request began.
Somewhere in the conversation we asked him to reread what E*Trade had
sent, and discovered they had left off the credit union.  So we
started searching on our end.  We discovered the money at Credit Union
Services Corp.  and they confirmed they had returned it to the
U.S. because the destination had been omitted.

We attempted to resend the wire on 16 August (again US $2800),
verifying it had the full, correct information.  This wire also never
arrived in our Australian account.  We have not been told why.
Neither wire was found until 28 September, when they were found in
E*Trade's account at the Bank of New York.  We have not been told how
long it sat there or where it was otherwise.

On 20 August we rang, and spoke to ****.  **** began a trace and
looked up the AU$ amount (AU$3802.25) which we needed to begin a trace
on our end.  We confirmed that this money had never arrived at Credit
Union Services Corp.  **** said we should hear the result of the trace
within 48 hours.

On 25 August we rang again.  Xxxxx expedited the trace.  On 27 August
we spoke to yyyyy.  He said they were still tracing and escalated
it again.

On 28 August we spoke to ****.  She said the funds were being
returned (why?!)  and would arrive at E*Trade that Monday.  She said
they would know why on Monday.

On 31 August (your Monday 30 August), we rang.  No news, and no money.
On 1 September (your Tuesday 31 August), ***** said she would
send the report to her supervisor.  She said everyone (meaning reps
like her I think) has been doing the right thing regarding requests,
and had no idea why there was no resolution.  We asked folks at our
credit union to double check that the money had never arrived with
them or CUSC. They confirmed that.  (We later asked for a statement in
writing, which we have in a letter dated 15 September.)

On 2 September, ***** reported that he saw an escalation sent the
previous day by a supervisor, and that there had been a 5-day delay
between starting the trace (on the 20th) and assigning a person to it
(the 25th).  He thought that was ridiculous and sent another note to
his supervisor.  He said we should get email from the supervisor.

On 4 September I got *****.  After 5 minutes on hold
(international calls, mind you) I gave up and rang back.  Xxxxx said
yyyy did indeed put in a request which was being acted on.  He said
the back office was working on it, but had no name.  He said they were
working on crediting funds to our account for both missing wires, but
that with Labor Day coming up, not to expect results until Wed.  or
Thu.  But do expect the money to reappear.

On 9 September (again, your 8 September, Wednesday), there was no
money and no alerts.  I called again and spoke to zzzzz.  She said
the supervisor in charge wasn't in.  I demanded to speak to her
supervisor then.  Xxxx (the supervisor) said they've put in a wire
recall.  She said, "Sometimes these things take up to 6 weeks," adding
that the destination bank has to reverse the process.  It goes from
E*Trade to Bank of NY, then to the Federal Reserve System to the
foreign bank.

That was infuriating for several reasons.

      o Everyone else had said wires should take up to a week.  (And
         indeed they should take much less than that if intervening
         banks don't hold the money to draw interest!)

      o We already knew E*Trade could make this transfer in less than
         a week.

      o We already knew the destination bank (CUSC) had long ago
         reversed the process for the first transfer.

      o We already knew the destination bank had never received the
         second transfer.

      o Number of hops is largely irrelevant.  Email and credit card
         transactions work instantaneously.

She had no answer other than that it was complicated.  She did
volunteer that they had checked the E*Trade account at BONY and it
wasn't there.  I asked whether it was somewhere else at BONY? What
about in the "Federal Reserve system"?  She said they don't talk on
the phone, but just use the electronic system.  I suggested she try
the phone.  She said they were closed now, but the manager would send
an alert when she finds something.

On 25 September we talked to ****  at x5901.  She looked
at the notes, and remembered talking to us about a month or two
previously, and was shocked that it hadn't been resolved.  She said
she'd call back in 20 minutes after talking to her supervisor.  Unlike
all previous experience, she called back!  She said she had taken it
to you, her direct supervisor.  She kindly gave us your direct number
in case we wanted to speak with you, and said you and she were
referring the case to the chief customer service manager, and that
someone should contact us Monday or Tuesday with news.

Finally, on Tuesday 28 September, we heard that the wire had been
found at the BONY, and that it would be returned in a few days.  On
October 1, it was (mostly) credited back to our account.

Explanation  and  Compensation

So what happened?  Was it at BONY previously, despite earlier claims?
I would like a detailed log of where it was from the time it was sent
out, and some explanation of why it wasn't found earlier.  If it was
sitting at BONY the whole time, I think E*Trade owes us a large
apology.

I expect you are not interested in the hassles it caused at this end.
How- ever, I think I am justified asking for reimbursement for the
direct expenses: E*Trade's wire fee, the transfer fee for the credit
card we had to use instead, the phone calls, and the lost interest.

In addition there is the money lost due to exchange rate.  The wires
were returned as $2740.29 and $2722.41.  But they went out as $2800
each time.  I understand that currency exchange fluctuates, but since
we never received the money, I can't really justify what amounts to
being charged to let you borrow our money.  The difference is $137.30.

In summary, with items rounded to nearest dollar:

   _Item___________________________________________________US$________
     Wire fees ($25 ea.)                                $ 50.00
     Bank fees for credit card advance                  $ 86.00
     International Phone (approx.)                      $ 10.00
     Lost interest (approx.)                            $  3.00
   __Exchange_rate_discrepancy__________________________$137.00_______
                                                        $285.00

I hope that this letter causes E*Trade to improve its fault-handling
policies and processes to reduce the risk of another family suffering
the same problems that we have.

I hope also that you understand our decision to copy this letter to
the Better Business Bureau.  My wife and I are really rather alarmed
at this event, and think E*Trade should have to formally reply to show
they have addressed any systemic problems.

Finally, an apology to you, (name witheld).  As someone who was part of
the solution, it is unfair to burden you with this letter.  But I can
write to you in a more constructive tone than I can to the anonymity
of E*Trade, and of course I have reason to believe you know how to get
things done there.

                                                    Sincerely,
                                                    Charles Twardy

As noted in the letter, we filed a complaint with the Better Business Bureau at the same time we mailed this letter, so that the incident will be a matter of public record. Complaint #: 1756038.

   The bureau that will handle your complaint is:

   Sacramento Valley BBB
   400 S. Street
   Sacramento, CA 95814 -6997
   Phone: (916)443-6843
   Fax: (916)441-3356
   Email: ops@northeastcalifornia.bbb.org
   WWW: http://www.northeastcalifornia.bbb.org

January 31, 2005

Mr. Charles Twardy
38 Roberts St.
Glen Waverly, 3150
Australia

Re: Account Number xxxx
Better Business Bureau Case#42001363

Dear Mr. Andrews: [?!]

I am writing on behalf of E*TRADE Securities, LLC (E*TRADE) in response to your recent inquiry 
concerning missing wire transfers. I hope that you will find the following information useful in
clarification of this matter.

Our records indicate that the first wire transfer in the amount of US$2,800 was initiated on 8/6/04 and
returned to E*TRADE due to incomplete wire instructions. The wire instructions only noted the
intermediary agency and not the final destination. On 8/16, E*TRADE initiated a second wire 
transfer for US$2,800. Again, due to incomplete instructions, this wire was returned to E*TRADE
on 9/28/04. Please note that you were only assessed one fee in the amount of $25.

On September 29, 2004, your account was credited $137 to compensate for the difference in the 
foreign exchange rates. We have also credited your account for the $25 wire fee, $10 for
international phone calls, $3.00 for lost interest and the $25 Account Maintenance Fee assessed on
9/22/04. We will credit the bank fees for a credit card advance, if you provide us with a statement
detailing this charge.

We hope that this letter has resulted ina resolution of this matter. We wish you success with your
future investments.

Sincerely,


xxxxx yyyyy
Compliance Specialist