I got an email alert today from E*Trade that I'd had some shares of stocks I was holding with the company sold. I didn't execute the trades and thus I was a bit freaked out that someone else had made them on my behalf.

I called customer service, and they informed me that there is a well-hidden "service fee" for inactivity with E*Trade if you do not make a trade per quarter. Like a good value investor, I was sitting on my stocks and just letting it ride. I asked why I wasn't given a heads up this fee was going to take place, and I was told the "alert" on my E*Trade account let me know that (even though there was no email sent to me).

Since I have just been sitting on these stocks for a while now, I guess I've been charged said fee a couple times; only now did I notice when they decided to liquidate my account to pay for them.

I've never liked E*Trade for stock trading. Too much noise and big headlines. I prefer the more bare-bones, no bullshit, Scottrade. As far as I know, they don't punish people for not needlessly moving money around.

(Photo: ShutterCat7)

Joe writes:

I lost my mother in April of 2007, and was appointed as co-trustee to her Estate. My brother was the other co-trustee. Problem was, he shipped out to Iraq the very same day she passed. While he was able to return for emergency family leave for several days, he had to return to his Army unit south of Baghdad after we held a memorial service. So, for all intents and purposes, I was the sole trustee since he couldn’t effectively do much to help me from a war zone. My father had passed the year previous, so I’d already gained some valuable experience and had become somewhat of a hobby-level forensic accountant.

My mom was not much of a communicator, and she held most of her financial doings close to the vest, even in her final weeks. After she passed, I had to go through boxes of documents to determine what holdings she had, tally them up, then develop an action plan to convert them all into one large Trust account that I was establishing with another firm. She had a little of everything: Stocks, Bonds, Mutual Funds, and two CDs with E-Trade.

Over the course of the 18 months, I’d managed to contact each financial institution where she had holdings, fill out and return the paperwork they requested, then liquidate those holdings and move the proceeds into this Trust account. Thank heavens I have a nicely equipped home office with a decent grade multifunction printer and a FedEx-Kinkos down the street.

So back to E-Trade. My mother had two measly CDs there, combined value of not even $10K. I’d actually sent letters to E-Trade the year before with all the various signed and notarized forms they asked for. But nothing ever happened, and I was never able to cash out the CDs to consolidate the money into the Trust account. Mind you, I worked with a half-dozen other financial institutions (she spread her money around) and had a much easier time with them. But not E-Trade.

Calling their main customer service number to ask the simple question “What do I do to get this money” would prove to be a pointless endeavor. I would get different responses from different people, and then told somebody would get back to me, which (of course) nobody ever did. I’d continued to write and call to no avail.

So I changed my approach a little, getting away from their joke of a call center in an attempt to get deeper into their back office to locate a person who actually gave a crap and, more importantly, could help me achieve my goal. Finally, I got a call back (cue the chorus of angels) with a name and number. I thought I was neared the end of this journey.

She explained what she thought the hang up was, that since my brother was Co-Trustee, they needed his signature on some of the account forms. He was nearing the end of his tour in Iraq, and when he came back to the states, I gave him the forms to sign and promptly sent them back into E-Trade. Surely now they had everything they needed and would let me cash out those CDs. Umm. Yeah. Didn’t happen. That was back in April, and I’ve not gotten as much as a penny out of them.

I have the name and number of this nice lady that seemed to want to help me, and since she actually returned my calls (more than once), I though she’d be happy to “un-stick” things for me. Problem is, she is suddenly unreachable. Roughly half the time I call her number and extension, I get her voicemail, leave a message and never get a return call. The other half of the time, I call the very same number and extension, and it rings and rings and never goes to her voicemail. So I’m thinking that she still works there, but who knows?

I’m hesitant to call the main customer support number because I’ve never gone anywhere but in circles with them. But the “inside” person that I was hoping would be the answer has become unreachable and unresponsive.

So Consumerist, do you guys have any “EECB” info on E-Trade? I need something. I guess I’ll bite the bullet soon and call their main number and re-invent the wheel with somebody who will tell me the same flim-flam as all the others. I’ve given them EVERY single document, form and signature they have asked for, and they simply won’t let me at this money.

Matt W.

We don't have any EECB for E*Trade, but here's how to go about finding it. They can be unresponsive. It took one reader eight EECBs to get his own money from them. You should also file a complaint with your bank's regulator, which for E*Trade is the Office of Thrift Supervision. Here is their info on filing a complaint over the phone or by email: http://www.ots.treas.gov/?p=ConsumerComplaintsInquiries

When we posted Brice's story, we listed the names and email address format for E*Trade's executives, and encouraged Brice to fire away using the methods in The Ultimate Consumerist Guide to Fighting Back. The results:

Dear Consumerist,

I wrote you a bit ago for help getting my money back. I had emailed the etrade execs the day after the post aired on your website, and was ignored. I than decided I'd do one more mass emailing and then I'd just take them into the legal system. This time I kept the letter extremely short (the first one was about 4 sentences and asked them to rectify the situation). This one just said I'd like to be contacted with my account numbers and phone numbers provided. I decided I was not going to be easily ignored this time, so I sent 8 emails to every executive in 3 minutes time. 1 hour and 38 minutes later my phone rang from a fellow from etrade. We did have to jump through a couple hoops, all of which could be done via fax and he explained and got back to me on every occasion. Today, I got my checks and my accounts were successfully closed. On an ironic note, 3 days ago I received a letter saying that my account has only earned interest for a year and had no withdraws or deposits and if I didn't withdraw or deposit with in the next year the money would be turned over to the state.

Hooray for Brice for staying on E*Trade for all this time, and kudos to E*Trade for at least accruing interest on the money they were holding hostage.

Brice had been trying to close his E*Trade account since mid-2007, but E*Trade wouldn't let him. E*Trade had put his account on "lockdown," and although he could check his balance, Brice was unable to make withdrawals or deposits. Numerous calls and letters were of no help, and E*Trade had begun to get sick of his attempts to get access to his money, so they decided to cancel his account. Except they didn't. Brice can still check his account info online, and to his surprise, he's still earning interest on the balance that E*Trade won't give back.

Hello,

I'll start out by saying, I loved E*Trade at first, $25 to open accounts, so I opened 2 and after the $25 everything was smooth for the first 2 months. I loved the 1 day transfers because I didn't have to lose 3 days interest like sending money around with the rest of banks. Soon after that my account went into a lockdown. The first 2 months their customer service reps were quite nice and would give me addresses to mail to, let me talk to supervisors. I've mailed them letters and have confirmations, yet they "don't have them"; one rep even told me the account notes said a letter was received, but the letter wasn't there and no one had it and to just resend it. Soon after this I can no longer talk to a supervisor, they will just hang up on me and tell me to write them a letter. So exactly 2 months ago to the day; I received a letter telling me they decided to close my account. Well I'd been trying to close it for 8 months prior; but this time it's their decision. I almost jumped for joy when I read the letter because I figured they had a competent closing system where I would get my check. Guess what; I still don't. I can still login - my account is accessible online, but I can't transfer money and anytime I try to withdrawal via ACH [Automated Clearing House, an electronic banking network often used for direct deposit and electronic bill payment], they return saying NSF (not sure how) and they do in fact keep paying me interest (small perk). They refuse to do anything and all letters are being ignored (apparently). I would try an EECB, but no one seems to have any corporate email addresses, and corporate phone numbers are impossible to access.

Firstly, as I just found out when I transferred all my long-term liquid savings there from HSBC Direct, E*TRADE will hold onto your money for about 15 days after your initial transfer into a newly opened account. Most places have it available in 3-4 days, I'm guessing that what they're doing is attracting deposits with high rates and then holding onto it longer because they're making money by using your cash to make guaranteed short term loans.

Secondly, people have been concerned about E*TRADE's losses due in large part to their exposure to bad subprime mortgage investments. Should a bankruptcy that happen, as long as you have less than $100,000 in, your money is FDIC insured and you'll get it back. What would happen in that case is that another bank would assume all of E*TRADE's deposits and you would become a customer of that bank with an account set up for you and everything. In the case of Netbank, which folded and its customers were taken over by ING Direct, is that Netbank customers logging in to their Netbank account found a welcome screen telling them of the switch and then they used their Netbank usernames and passwords to log into their ING Direct accounts.

So all and all, I'm not overly concerned and that's why I pushed my monies over there.

Citadel's help is sort of a mixed-blessing, because it comes at a high price and doesn't guarantee that E*Trade will be able to recover if it loses too much money on other debts—for instance, on home equity loans "if housing prices continue to decline."

By taking on an extra $1.7 billion in debt to Citadel, E*Trade will be on the hook for debt payments to the hedge fund at a high coupon rate of 12.5%. Citadel will also get 19.9% of E*Trade's stock, diluting other shareholders' stakes.

E*Trade says:

November 12, 2007

This is a challenging time for the financial services industry. Bad news in the credit, housing, and stock markets continues to dominate and E*TRADE is not immune to these market conditions.

However, you, our customers, should know that we continue to be well capitalized by regulatory standards. As a matter of fact, we could absorb an immediate write down in excess of $1 billion and still remain well capitalized. Nobody knows for certain what the ultimate impact will be from these markets, but it is our expectation that news in the market will get worse before it gets better and, armed with these expectations, we are taking prudent measures to effectively manage the company's balance sheet.

We will continue to earn your confidence, providing state-of-the-art asset protection, including E*TRADE's Complete Protection Guarantee, SIPC Protection for E*TRADE Securities customers and FDIC Insurance for E*TRADE Bank customers.

We appreciate the opportunity to continue to serve you and your investing needs.

—Jarrett Lilien
President, COO and Director, E*TRADE FINANCIAL

E*Trade says can absorb writedown up to $1 billion [Reuters]

E*Trade is reassuring its customers that it remains healthy despite the restructuring. From E*Trade's letter to its customers:

Today, we took proactive measures to further insulate E*TRADE from the recent declines in the credit markets. You can feel assured that the measures we've taken are non-issues for our customers. Although industry-wide liquidity and credit concerns are making daily headlines, E*TRADE's business fundamentals are firmly on track, our balance sheet is strong, we have substantial capital and we continue to be profitable - with projected earnings of approximately $500 million in 2007.

E-Trade to Restructure on Credit Worries [CNNMoney]
Company Exits Wholesale Mortgage, Restructures Institutional Brokerage, And Revises 2007 Guidance (Press Release) [E*Trade]

They claim that any fees charged to you by any ATM will be refunded by the end of they day. There's a $15 monthly fee for accounts that do not have direct deposit set up, or have an average balance of less than $5,000.

Might be a good idea for you ATM fee junkies. You know who you are, and yes. It is a problem. Let's hear other suggestions for avoiding ATM fees in the comments, because ATM fees suck.

ETrade High-Yeild Checking [ETrade]

HSBC Direct 5.05%
eTrade 5.05%
Emigrant Direct 5.05%
WaMu 5%
Capital One 4.75%
Citibank Direct 4.5%
ING Direct 4.5%

Note that under federal law, many online savings accounts may limit you to 6 withdrawals max. So don't give up the brick and mortar yet. Instead, the "old-skool" bank for your day-to-day transactions, and an online savings account as your long-term piggy-bank.

UPDATE: Reader bosco says,

I think you should make a note that the 6 maximum withdrawals are on a monthly basis and only apply to electronic withrdrawals (an online transfer) but if the bank gives you a check payable to you or you use an ATM, those do not count.