Zecco Accidentally Increasing Some Customers' Buying Power Was Not Intentional April Fool's Joke
Yesterday we reported that online brokerage Zecco had accidentally increased the buying power of some of some of its customers accounts on April 1st in an apparent April Fool's prank. However, the company says on their blog that it was no joke:
On April 1, 2009, one of our vendors provided Zecco Trading with an incorrect data feed which caused some customers to see erroneously high buying power. This error was quickly corrected, but about 1% of our customers were impacted.
Furthermore,
All positions in excess of our customers' true buying power have since been closed. Except in a very small number of egregious and fraudulent cases, customers will not be responsible for losses (or gains) incurred for trades in excess of their buying power.
Additionally, we want to make it clear that contrary to some reports, this was not in any way intentional and was not an April Fool's joke. We take the integrity of our customers' accounts very seriously and we have taken measures to ensure this does not happen again. We sincerely apologize to our customers if this caused any confusion.
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Comments:
I'm sure they are taking it very seriously.
You should just put "Beta" next to everything, then you do not have to apologize. Ask Google :-)
That's no prank, that's just mischief that happened to occur on April 1.
Kind of like punching someone in the groin and saying "April Fool's!"
*Gasp* It was the Conficker worm!
And I'm sure Consumerist is taking it very seriously that they decided for themselves that it was an April Fools prank. How about you save the alarmist headlines for when the facts actually support them.
Just blame it all on Tibor, and say he stuck his USB stick into the mainframe by accident?
So they're incompetent, not humor impaired. Yeah, I'd feel much better in using them now.
I highly suggest people not use Zecco. When I first heard about this company, it sounded like a good deal, in that trades are free if you keep X amount as a balance in your account.
I was setting up an account, and had a question so I emailed customer service. I ended up receiving a FWD'ed email from some random person who Zecco emailed to answer my question! Luckily, this person FWD'ed me the email and was like "I think this is yours". I mean, how does a company do that, it wasn't even CLOSE to my email. I let Zecco know about this, and they didn't do a thing to correct it or get back to me to apologize. After that, I closed my account and continued to use Sharebuilder, which has been MUCH MORE RELIABLE THAN ZECCO.
Let's assume it was a mistake on Zecco's part. Shouldn't some of the blame for this problem creation be allocated to the people who logged in, saw what was obviously NOT their correct account balance, and thought "QUICK! buy stuff before they realize their mistake!"
Zecco is obviously in error for creating the situation in the first place, but did these people seriously think they magically got millions overnight?
@outoftheblew: You did notice that the *users* of the site thought it was an April Fool's Day joke? Besides, facts aren't all that much fun anyway.
Let me understand this... if it wasn't a joke but an error and it was THEIR error... they should be responsible for their error and not force customers to pay for their error. This is like people who forget to use a condom and then not wanting to deal with the consequences... sorry, you made the error... you pay for the consequences, not your customers.
@Terraxsu: I completely agree. If I sign into my bank account right now, and find extra $$, I'm gonna first *think* about taking it and running for the bahamas... then reality sets in and I realize my life sucks and I should report it to the bank. On April Fools Day? I'd be even MORE leary!
@Terraxsu: That was my question too? Wouldn't you think something was wrong when your account suddenly has considerably more money in it?
I entered some massive (but way out-of-money) orders just to see if they'd get accepted. and they did after going to "Broker review" first so some human was looking at an order for roughly 20x my account balance and still putting it through.
I cancelled my orders eventually but it was obvious something was deeply flawed within their system.
zecco denies it was a joke. meaning just an utter flub on their part...is that worse?
@Terraxsu:
Why in the world did Zecco keep their systems running? Once the problem was detected, Zecco should have locked all customer accounts while they worked to correct the problem.
It's a tough business decision but better to be out of service for a few hours vs deal with customers making bogus trades.
@Terraxsu: From what it sounds like it wasn't cash in their account but increased buying power (margin) FWIW.
@outoftheblew: Blogs like this aren't legit sources of news and often jump right to the attention-grabbing headline without verifying or fact-checking anything. Facts and reality don't drive page views, though scare-tactics and outrage do. Things are twisted toward what the readers want to see (anti-big business spin in this case).
Not saying it's right or anything. It's just what I've come to expect after near-daily site-visits.
:sigh:
@Terraxsu: Of course it should, but its not relevant because the users aren't a business.
In other words if a business and that business' customers are screwing up, the only thing that is important to me as a potential customer is how the business behaves, not how the customer behaves.
Irresponsible customer? Not my concern.
Irresponsible stock brokerage company? Potentially a HUGE concern to me.
The whole thing sounds like a vicious april fool's prank played on Zecco by a hacker... which is only bolstered imo by their claim of "display issues". Better they look like idiots than vulnerable to hackers.
This sort of incompetence, covering up and lack of judgement just about sums up the whole financial crisis doesn't it?
How can they say it was a display issue?? Unless people had large margin balances, their trades should have been rejected. This doesn't sound like a "display" issue if people executed trades. Trades are legal contracts, not game tokens!
Sounds like a major goof on the part of Zecco (who I admit, I've never heard of -- nice introduction). I'd pull my account before the SEC does it for you
@Hoss: BTW, on your way out, be sure their transfer was accurate (including shares and dividends in transfer). I don't trust this business in the least
I'd written a long response, but canned it in favor of simplicity: Another error-laden shock piece by Consumerist, news at 11.
I'll still read you, my dear Consumerist, just with increasingly keen spidey sense for ridiculously bad fact checking.
If it was just "a display problem" then customers wouldn't be able to draw funds off of the error. It was a fundamental, systemic error that impacted their customers negatively.
They should still be ashamed and apologetic.
Like Whining Tim, above, I would like to screech "OMG The Consumerist Is Wrongz!!" Or recognize - gosh - that blogging is hard. Or good ones are.
@SnehaNavision: except nothing works like that. Just because the bank accidentally added two extra zeros to your bank balance doesn't mean that money is yours to spend. The same thing goes with the idiots who bought securities with money they knew wasn't theirs.
I have no sympathy for the people who bought stuff knowing the buying power that Zecco showed wasn't their true buying power. I have a Zecco account and I wouldn't dream of doing that. What did those people think would happen? I'm getting ranty, but I just can't believe some people.
That being said, a security breach or error or whatever happened, is HUGE points against Zecco.
@Terraxsu: There's the concept of original sin, which pushed the needle further in Zecco's direction.
And the fact that, y'know, customers PAY Zecco to be, y'know, remotely competent with their money.
So, it's the difference between a time-out, and lining up the malefactor and shooting them thru the head with a pistol on the street with a camera crew filming.
@Cocotte: Or more likely, incompetent programmers employed by Zecco.
Stay away from local news. Life really isn't THAT full of ninja-clad hackers.
@supercereal: sounds to me more like a case of "seems like a terrible April Fool's joke" and less a "looks like a bug but let's call it an April Fool's joke for more shits and giggles and pageviews!"
Can we change the name of this article to Corrections: Zecco Giving Millions to Customers Was Not Intentional April's Joke, Just Incompetence ?
@Tim Yocum: Don't you have more sparkly flowers or frolicking puppies to add to your wall? ZOMG! Ashley Simpson has a new single coming out!!
Consumerist has a lot of editing issues, but I'd have to argue that this isn't one of them. I'd say it's a pretty reasonable assumption to make, given that every other site on the internet had some form of April Fool's Joke going, and the Consumerist immediately updated the original story when they got word back from the company.
Zecco should own up to their mistake though.
@Terraxsu: Except, according to a lot of the comments posted in the Zecco forums, people didn't think their trades were real. They thought it was an April Fool's Day prank, a pretty good one, and treated the fake money (which they knew to be fake) like Monopoly money to make fake trades. The problem is that the trades went through as real, which confused and alarmed people.
It doesn't really sound like there was a ton of maliciousness on anyone's part here, and Zecco really should be held liable for allowing trades to go through on accounts with no money. That is a pretty simple coding error (and my understanding—although I could be wrong—is that they have and actual human verifying transactions, which makes everything so much worse.)
@Tim Yocum: We might be related, just yesterday I got a bad Big Mac and said "I'll still come to you my dear Mickey D, just with increasingly keen spidey sense for ridiculously bad 100% pure all beef patties" Then I thought, WTF is spidey?
@deadspork: Because for every blatantly misleading, critical, or assuming post, there are several that offer extremely good advice and helpful information. That's like asking why one doesn't move out of a country over a dislike of one or two (of many) particular laws.
Just FYI for the Consumerist, the "Buying Power" displayed by a Brokerage for a margin account is more like "Available Credit" than a "Balance." It represents the amount of money you can use to purchase stocks including your cash balance plus margin loans.
@Trai_Dep: Trust me, I work in webapp dev, and I know only too well how frail even financial systems are and how full of idiots the coders hutches are (worked for a biggish shopping cart vendor once and my god the holes in that system... /shudder).
But any system dealing with people's money does have a big target painted on it.
@Trai_Dep: (pondering more) There aren't a lot of ninja-clad hackers, but there are thousands of t-shirt-clad script kiddies ripping code off of whatever passes for usenet these days. Curiosity + general juvenile malice + general juvenile lack of empathy for people on the internet = a hella bunch of digital mischief being perpetrated.
Right . . . CYA . . . no we didn't do it on purpose as a joke, it was an error!