E*Trade Safety Review: How Safe is Your Information?

E*Trade was one of the earliest online brokers to pop up in the United States. You may remember their regular advertising spots during Super Bowls over the years. Like most online brokerages in 2019, E*Trade switched to no commissions or fees on trading stocks, ETFs, and options.

The online trading platform was bought by banking behemoth Morgan Stanley in 2020. It’s currently estimated that E*Trade has more than 5.2 million users with more than $360 billion in assets. Each of those users must entrust their investments, cash balances, and their most private and sensitive personal information with E*Trade and Morgan Stanley.

How do they protect assets and data from would-be hackers and other cybercriminals? Do they offer you the necessary cybersecurity measures you need to protect yourself from authorized activity on your account? We’ll answer these questions and more in our E*Trade review below.

E*Trade: Short Review

With E*Trade’s established financial history, zero commissions, and zero fees on stock and ETF trades, it’s no wonder people continue to choose it over other financial apps. However, the amount of personal data the company requires for an account might make you nervous. At sign-up, you have to give the company your social security number, tax identifiers, and bank account information, as well as other sensitive information.

The good news is, E*Trade seems to take its customers’ security seriously. Even though they suffered a data breach in 2013, the company has had a clear track record since. They protect their site, systems, and trading platform with the necessary safeguards to protect your investments. E*Trade protects its customers’ privacy with high-grade 256-bit encryption, two-factor authentication, a protection guarantee, and SIPC-insurance.

E*Trade scored an 8/10 in our safety and privacy review. It is a nice and secure app with a professional look, the right safety measures, and plenty of features.

E*Trade Specifications

Safety: Is E*Trade Secure?

As a long-standing online trading firm, E*Trade has a strong record of high security. They’re also a member of SIPC, the non-profit corporation protecting investors for over 50 years. E*Trade takes the security of its customers’ information and money seriously, as can be seen from their use of bank-level physical security and high-level encryption.

Besides the physical and digital security measures above, there are some other noteworthy aspects of E*Trade’s security that earned it a 9 out of 10 safety score:

• E*Trade received a solid “A” rating from a third-party cybersecurity reviewer — scoring 836 out of 950.
• Two-factor authentication and facial ID or fingerprint biometrics are used during the login process.
• Customers haven’t incurred any financial or material loss due to cyberattacks on the company’s systems.
• E*Trade is backed by Morgan Stanley, a member of the FDIC.
• E*Trade has a clear fraud protection guarantee that means they’ll cover losses caused by any authorized account access.
• E*Trade requires all new account holders’ identities to be verified and holds the account in review until this step is completed.

E*Trade security features

When choosing an investment app, it’s vital to consider whether your options have the cybersecurity features necessary to protect your account from unauthorized logins and brute force attacks.

Here’s what E*Trade offers in terms of security features:

• Hardware token: This is a Symantec device that automatically generates a six-digit code every 60 seconds. In order to log into your E*Trade account, you’ll need the token, the unique code, your user ID, and password/biometric login.
• VIP Mobile Access (2FA): E*Trade has a separate app with unique user IDs and passwords. Once you’re on the app, you’ll get a six-digit access code to log into your investment and trading accounts.
• Biometric logins: Fingerprint or face ID scans are available for logins on mobile devices.
• High-grade encryption: Transmitted data like passwords, biometrics, transactions, financial and other sensitive personal information is coded and scrambled and can’t be read by third parties. Good encryption creates a safe connection between E*Trade’s web trading platform and your device, whether it’s mobile or desktop. When we contacted E*Trade customer support, they stated they used 256-bit encryption, which is military-grade.
• Automatic logouts: E*Trade logs you out automatically if you haven’t been active for a period of time.
• Account locked after failed logins: This feature blocks access to your account after a certain number of failed login attempts. Calling customer support can get you back in. This protects against brute force attacks, password guessers, and other hacking attempts.
• Educational website: E*Trade does an excellent job of informing its customers of the necessary precautions and measures they need to take to protect themselves and their accounts.

Independent cybersecurity score

Currently, E*Trade is a safe online trading and investment company. Cybersecurity reviewer UpGuard currently rates E*Trade an “A”, with a score of 836 out of 950. UpGuard determined this score by reviewing several aspects of the firms’ security:

• Website security: Only one issue was found, “HTTP strict transport security (HSTS) not enforced.” This weakness makes website visitors susceptible to man-in-the-middle attacks.
• Email security: No issues found.
• Network security: One issue was found, “DNSSEC not enabled”. This missing security feature means that a third party could forge the DNS record that guarantees the domain’s identity.
• Phishing and malware: No issues found. This section of UpGuard’s review means that no phishing pages or malware appear to be hosted by E*Trade’s website.
• Brand protection: Two issues were found, both having to do with domain registrar protections. The E*Trade domain is not protected from unsolicited deletion or update requests being sent to the registrar.

Overall, E*Trade’s security isn’t perfect, but it takes security seriously and takes the necessary security steps to protect its customers’ funds and sensitive data.

Is your money safe with E*Trade?

E*Trade has a solid fraud protection guarantee that protects customers from authorized activity. A lot of online brokerages aren’t as clear when it comes to unauthorized transactions. If E*Trade can clearly determine that you didn’t make the transactions in question and they were a result of fraud, they’ll reimburse you. Your company shares and securities are protected by industry-standard insurance coverage as well.

Your funds are protected by government organizations and approved groups, such as:

• Securities Investor Protection Corporation (SIPC): Your securities are protected up to $500,000 and up to $250,000 in cash. E*Trade provides extra SIPC coverage through Lloyd’s of London. After the minimum SIPC insurance is exhausted, coverage extends to $1 billion in aggregated losses.
• SEC-regulated: E*Trade is regulated by the Securities and Exchange Commission (SEC). The SEC is a federal government agency that regulates financial markets. It enforces US finance law, levies fines, and penalties, and takes legal action against perpetrators.
• FINRA membership: FINRA is a government-approved nonprofit that works with the SEC to identify fraud and other crimes, and prevents investor losses. FINRA oversees brokerages that belong to the organization, of which E*Trade is a member.
• E*TRADE Complete Protection Guarantee: In their own words, “we offer the E*TRADE Complete Protection Guarantee, which protects your privacy, your assets, and every transaction you make. Complete fraud protection: $0 liability for unauthorized use of your account.”

Has E*Trade had a data breach?

There have been no data breaches or significant attacks on E*Trades’s systems in recent years. No customers have experienced financial loss from outside cyber attackers or data breaches.

The last major data breach occurred in 2013 when financial companies became the primary focus of cyberattackers. The trading platform notified nearly 31,000 customers that their data may have been accessed. Fortunately, the attack was limited and only the contact information of customers was breached. No financial losses occurred.

Since the incident, E*Trade has had a clear track record regarding cybersecurity incidents.

Privacy: How Does E*Trade Handle Data?

Unfortunately, all investment apps require a lot of personal data to allow you to sign up for an account. This is due to laws around brokerage accounts and investing. This means there’s no way to invest in E*Trade anonymously, but there are ways to better protect your sensitive data when trading.

For privacy, we gave E*Trade a score of 8 out of 10 for the following main reasons:

• E*Trade requires all new account holders to provide some sensitive, legally required information, such as proof of identity, proof of residency, date of birth, and marital status. Additionally, an email, phone number, financial information, and employment details are required at setup.
• E*Trade does not sell any collected personal information to third parties. However, this information is used to market and advertise its products.
• Some information collected is necessary to offer fraud protection services.
• E*Trade does give the user some control over what information is collected and how it is used.
• For no-commission brokerage accounts, E*Trade makes money with “payment-for-order-flow,” a practice where they sell trade data to another company that makes the actual trade.

What information does E*Trade collect?

When you sign up for an online investment app, state and federal laws require that you provide most of your closely-guarded private data. Here’s some of the info E*Trade collects:

• Identifying information: Bank account numbers, social security number, date of birth, driver’s license or government ID numbers, marriage status
• Contact info: Name, mailing addresses, email addresses, and phone number
• Financial data: Income information, credit, and debit card numbers, investments, assets, credit scores, and other financial data
• Access authorization data: User names, PINs, passcodes, biometrics, security questions and answers
• Education and professional info: Formal education history and your employment information

When you’re using the E*Trade app and website, they also collect plenty of other information from your computer and mobile devices. If your privacy settings are lax on your browser or operating system, they’ll pull data from there, such as:

• Device identifiers: Your IP address, device type, operating system
• Browsers: Type of browser you used to access the site
• Site and app interaction: Your browsing history, search history, clicking history, and other session data
• Advertisement interaction: Clicks and responses to their ads on the site or app
• Geolocation data: GPS location from your mobile app
• Social media: Social media information
• Transactions: Amount of the transaction, date and time it was executed, and type of transaction

If you don’t want all your data collected, you can contact E*Trade to deny permission.

How does E*Trade use your information?

A lot of the information that E*Trade collects, they collect for good reasons, such as fraud protection and prevention. However, they can also use it for marketing and advertising. E*Trade’s privacy policy states: “We don’t sell your personal information, and we don’t share it with others unless you tell us to or the law says we can.”

E*Trade uses your basic data to provide its services, improve its website and applications, and market and advertise its products. Location, usage, and device data might be used to tailor the app and advertising to your preferences. This kind of data also serves fraud protection and prevention.

According to their privacy policy, here’s how E*Trade might share your data:

• Sharing with third-party services: E*Trade needs other companies to perform services for them, such as fraud protection agencies, marketing and advertising firms, and security firms. Per their privacy policy, E*Trade also uses different providers for various administrative, telecommunications, software, trade execution, payment, and securities clearing services.
• Data analytics and marketing purposes: Your usage, location, and device data might be provided to data analysts for market research and analytics.
• Tailored advertising: Through tracking cookies and usage data gathered from your device, E*Trade creates interest-based advertising for customers. You can block cookies in your browser, tweak your privacy settings, and use a VPN to combat this kind of data collection.
• Government entities: E*Trade will give your personal data over to the government or law enforcement if requested.
• Fraud protection: Many online users don’t want to give up too much information to companies. It can feel invasive giving up data like your GPS location, IP address, and device identifiers. However, this data can be used during investigations of fraudulent activity on your account.

How does E*Trade make money?

E*Trade offers zero fees and commissions on ETF and stock trading, and there are no annual fees. The company makes its money off payment-for-order-flow, stock lending programs, margin lending, and fees for actions performed on the platform.

For no-commission brokerages, “payment-for-order-flow” is one of their biggest money-makers. E*Trade clearly states it participates in PFOF, meaning they sell your trading data to market makers on Wall Street. Instead of executing the trades themselves, E*Trade sends its orders to high-frequency trading firms and hedge funds. These firms pay for order flow so they can benefit from the difference between what they paid the brokerage and what they can sell the stock for later. While the retail trader might not get the market’s best price, the broker and executing firms benefit.

It’s estimated that E*Trade makes less than $0.002 for equity trades and $0.47 per contract for options trades. Fractions of pennies may not seem like much, but E*Trade makes more than $30 million per month on PFOF.

How to use E*Trade as anonymously as possible

If you want to use E*Trade without giving away more information than is absolutely necessary, take these steps:

• Disable cookies in your browser. This will stop a lot of your usage data from being collected, stored, and used. Tracking cookies and other tracking technology can store all kinds of data from your device. This could be your IP address, internet service provider (ISP), type of device and operating system, the specific browser you’re using, date and time stamps, and even a unique device or account ID.
• Contact E*Trade’s customer service to opt-out of certain kinds of data collection. We weren’t able to toggle any data sharing or collection settings within the app or web platform. Whether it’s marketing or affiliate advertising, you can opt out of data sharing by calling 1-800-ETRADE (1-800-387-2331). You can also use their internal customer service email.
• Use a VPN. Using a VPN will protect your IP address and ISP from being logged, and will also protect your bank account and social security numbers when you’re transmitting them to E*Trade. we recommend NordVPN for its high levels of security and usability.

Due to the nature of investment apps, you won’t be able to use E*Trade completely anonymously. Even so, taking precautions will help you take some control of the information the company has about you and how they use it.

Usability: How User-Friendly is E*Trade?

Up until this point, we have focused on E-Trade’s security and privacy. However, when choosing a web trading platform, usability is certainly something you need to consider. Using the app to the fullest will be difficult if user-friendliness is lacking, especially if the customer service is hard to get a hold of or cannot answer your questions (which, unfortunately, is the case with E*Trade).

For our E*Trade review, we scored the service a 7 out of 10 for usability for the following main points:

• The signup process is straightforward. You will be required to verify your identity, address, and banking information, as well as complete your official application.
• E*Trade is quite easy to work with. You can set up mutual funds and stock trades in a few clicks. Whether you’re on desktop or mobile, you shouldn’t have too much trouble.
• This is a zero fee and commission-free trading app.
• Customer service is hit or miss: it’s hard to get a hold of, and some support agents are far more knowledgeable than others.

While this app has been created for ease-of-use and sets you up for success, you kind of feel like you’re on your own when using it. In the case of an emergency or fraud, you don’t want to be waiting on the phone for an hour.

How to sign up for E*Trade

The E*Trade signup process is simple, although it does have several steps and requires verification of your information. You can complete the application process within a few minutes and have an active account within a few days (barring any issues with verification). To be approved for an account, a user must be:

• At least 18 years old
• A citizen of the US, a permanent resident, or have the proper visa
• Able to provide valid proof of identification (including a valid US Social Security Number and valid state driver’s license or state ID)
• Able to provide valid proof of US residency (including Puerto Rico), although exceptions for military personnel are available

E*Trade has both iOS and Android apps that are compatible with iOS 14.0 or later and Android 8.1.0 (Oreo) or higher. Users can also use their website application to trade stocks.

To install E*Trade, follow these steps:

1. Download the E*Trade app.
2. 
3. Select what kind of account you want.
4. 
5. Choose your type of account: brokerage, retirement, or banking.
6. 
7. Choose between individual, joint, or custodial.
8. 
9. Enter your name, address, and other identifying information.
10. 
11. Provide additional information, like your employment history.
12. 
13. Enter your investment profile and income.
14. 
15. Clarify how you’ll fund the account.
16. 
17. Customize your account further by going through some basic options on what to do with your cash balance.
18. 
19. Once your application has been approved, you need to create an online ID and password.
20. 
21. That’s it! You’ve created and set up your account! You can now set up stock watchlists and get started!

Software usability and options

When it comes to using the app, E*Trade’s software and interface are quite user-friendly.

Using the mobile app, we were able to set up purchases of Apple Stock and Vanguard Institutional Target Retirement 2015 Fund (VITVX) in under two minutes. Getting started is easy. You select your account, security type, and symbol. You can choose between stocks, options, mutual funds, and conditional (OTO). After you fill in the details, you can preview the order before purchasing, or save it for later.

The software is incredibly easy to grasp and use. Buying mutual funds in an IRA account can be done with a few clicks.

Risk-assessment

Within the app menu, there is a Knowledge Base section that covers investing basics as well as advanced trading. The Investing Basics section explains the terminology and how it all works in easy-to-understand language.

You’ll also get basic financial and investment advice based on how long you’re looking to invest your money. If you want to pull it out within five years, they offer lower-risk options. For longer timelines, they offer more moderate-risk investments. You can explore your investment style and look into more educational resources about investing.

We also received a call from a “financial consultant” at E*Trade to offer guidance in starting an account. All in all, E*Trade does an excellent job of encouraging responsible investing, and no part of the app encourages active trading or taking part in riskier investment strategies without first being informed and warned.

Pricing and fees

Although E*Trade doesn’t charge any annual fees for creating an account, they do work with several other kinds of fees. Here are the most important ones:

• Mutual fund trades (outside No Transaction Fee list): $19.99
• OTC trades: $6.95 per trade
• Bond transaction fees: $100 with a minimum of $10 and a maximum of $250
• International wires: $25
• Live broker assistance: $25
• Options contracts: .65 cents per contract, .50 cents if more than 30 trades a quarter
• Margin interest: 8.70% up to $10,000 balance, 5.45% on a $1,000,000 balance

Customer service

E*Trade customer service left us a bit perplexed. They offer support through live chat, email, phone, and in person. However, in practice, these options turned out to be hard to reach.

At the time of writing, all E*Trade branches were closed due to the COVID-19 pandemic.

The first time we tried to contact them by phone, we were informed of a 90-minute wait time. When we tried a few days later, it was a 30-minute wait. Upon answering, the customer service agent wasn’t able to answer our question about encryption, even after asking more knowledgeable team members. Though the agent was pleasant and helpful, we spent about 40 minutes on the entire experience and couldn’t find an answer.

The live chat wouldn’t work over the course of our testing: we were always greeted with a “Live Chat Unavailable” error message. When we sent an email through the Contact Us page within the app, however, we received a knowledgeable reply within 15 minutes.

Considering that customers often want to handle sensitive financial concerns over the phone, we were less than satisfied with the customer service experience. Perhaps if the app directed you toward email instead of other options, we could have scored it higher.

WARNING: Beware of phishing

If you’re communicating via live chat, make sure that you’re on the correct website (and not a phishing website) by checking the URL of the webpage (https://us.etrade.com/).

If a customer service representative calls you over the phone, never give them your personal information, even if they claim that it’s an urgent matter. While legitimate financial representatives have called us from E*Trade, we don’t recommend giving them any information over the phone.

Instead, thank the agent for contacting you and call the number listed on E*Trade’s website. Even though the wait time might be longer than you’d like, at least you’re sure that you’re talking to official customer service and not a scammer.

What to Do in Case of an E*Trade Breach

E*Trade has limited experience with data breaches, which is a good thing. They’ve had a clear track record since the 2013 incident that saw no financial loss for customers. While it certainly has a secure trading platform, breaches can happen. That’s exactly why it’s important to know which steps to take in case of an E*Trade breach. Here’s what you can do:

1. Assess the damage. The kind of information that was stolen during a breach determines your next steps. Has your social security number been compromised? Then you’ll immediately need to contact law enforcement and be wary of cases of identity theft. Although leaked data like your email and name might not feel as bad, you will have to be extra wary of possible E*Trade-oriented phishing messages.
2. Change your passwords. If your E*Trade password was leaked, you should change it right away. Even if it hasn’t, however, it’s good to update it. Always use strong and unique passwords. If you’d like an easy way to keep track of all your logins, you can always try a password manager like 1Password.
3. Set up fraud alerts. If someone uses your compromised data, a fraud alert will notify you. Usually, you can set up these services for free. You might try Experian, Equifax, or TransUnion, for example.

Whether you’ve been subject to a data breach or not, we always recommend using a VPN like NordVPN to secure your online activity.

Is E*Trade Right for Me?

E*Trade helped pave the way for all online trading apps and managed to stand the test of time. It’s still one of the most popular platforms out there, and beginners and experienced investors alike have flocked to it. Analysts give the company top-level security ratings, and they haven’t had any significant data breaches since 2013.  E*Trade has reported that there have been no losses or consequences from tech failure, cyberattacks, or data or security breaches in recent memory.

After signing up, you can get approved quite quickly for tax-friendly retirement or investment accounts (like Roth IRA), and trade stocks, ETFs, mutual funds, or bonds. Investors interested in guidance can use broker-guided trades. E*Trade provides the necessary security and safety required to keep your funds and cash safe.

Active traders may need a more suitable trading platform, however. Even with E*Trade’s Power trading app, advanced traders may require more features to meet their needs. Cryptocurrency enthusiasts may need to look elsewhere as well, as Bitcoin and other crypto aren’t yet available.

If you’d like to compare E*Trade to some other investment apps and brokerage services, check out our other reviews:

• Acorns
• Merrill Edge
• Robinhood
• Ally Invest