Bad April Fool's Joke: Give Away Millions In Fake Money; Users Start Trading With It
from the how-to-define-a-bad-idea dept
See Update Below. Well here's an idea that must have sounded good at one point. Upstart online brokerage Zecco (already known for pulling attention-grabbing stunts) had the bright idea for April Fool's Day to load up users' balances with much more money than they actually had -- sometimes millions more. Except... it looks like they never bothered to make sure people couldn't use that money. So plenty of users started making trades with the fake money... and when Zecco realized it, the company apparently started to force sell, even at a loss, charging the losses to the customers along with a "$19.99 broker-assisted trading fee." Oops. Update: Consumerist has updated their post with a message from Zecco claiming that it was not an April Fool's joke, but noting "Some clients may experience incorrect display of Buying Power and Account Balances." It's not entirely clear how those "incorrect displays" were apparently off by millions in some cases. Update 2: Zecco is again insisting this was not an April Fool's joke and that it was "a bad feed" from a vendor. It's not entirely clear why it took the firm 5 days to explain that, however...Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: april fool's, fake money, trading
Companies: zecco
Reader Comments
Subscribe: RSS
View by: Time | Thread
URL doesn't work
[ link to this | view in chronology ]
These links work
http://www.militaryphotos.net/forums/showthread.php?t=154744
[ link to this | view in chronology ]
Re: These links work
[ link to this | view in chronology ]
http://news.google.com/news?pz=1&ned=us&hl=en&q=zecco+april
[ link to this | view in chronology ]
On the other hand, it could be a matter of scale. How much money did these people have? If I have 100 million in a trading account, a fluctuation of a couple million up or down will not have the same impact on me as someone who has 100K (or less) in a trading account.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
If I were using them, I'd immediately pull my money, whether I was affected by the story or not. Millions of dollars? Sounds like, complete idiots are running the company, not just behind the buy button.
The company needs to be fully investigated and individual should be brought up on charges if something is found...Especially if it was a Aprils fool joke gone terribly wrong (whether their dismissing that or not).
Either way, it's ridiculous to put it all on the customers. I wonder what happens to the person that had $14k and actually made money? Charge people individually for the losses and seize money that people came out ahead with?
[ link to this | view in chronology ]
It doesn't matter if it wasn't an April Fool's joke
Maybe this should be a clue.
"Smart Money Magazine's 2008 Broker Survey, Smart Money named Zecco as one of the worst in the customer service category"
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
SEC Violation?
[ link to this | view in chronology ]
Re: SEC Violation?
[ link to this | view in chronology ]
RE: SEC Violation
As far as the account balances, Zecco will be fined by the SEC, several investigations will be launched, and users of the service will have a lawsuit on their hands.
every one wave by by to Zecco
[ link to this | view in chronology ]
[ link to this | view in chronology ]
typical client
[ link to this | view in chronology ]
Setting The Record Straight
Here's the real story: Setting The Record Straight
[ link to this | view in chronology ]
Zecco
[ link to this | view in chronology ]
margin account
Not in a margin account.
Think of it this way (somewhat simplified). You deposit $10K into an account. The broker will lend you another $10K so you can buy stocks or bonds. If your stocks go up, then great. But if they go down, you must either sell the stocks or deposit more money. The broker wants at least a "maintenance" margin, which varies by asset class. But let's say it's 25%. If the value of all assets in your account doesn't exceed what you owe the broker by at least 25%, you get a "margin call". But that's just a courtesy. The broker can sell you out at any time to protect himself.
In this case, let's say you had $10K in your account. Then Zecco added $100K into your account by mistake, then you bought stock with that new money. Now you have $110K in stock but you owe the broker $100K. Much less than a 25% cushion. So the broker can sell your stock immediately to protect himself.
It could be interesting if you have a "cash account" and never agreed to the terms and conditions of a "margin account".
[ link to this | view in chronology ]
It happens to me last October
[ link to this | view in chronology ]
Zecco's default customer service approach seems to be "your account, your fault" ...
[ link to this | view in chronology ]
test
test
test
test
[ link to this | view in chronology ]
Zecco customer account balances
I transfered out to TradeKing. (So far, this was an easy application & quick transfer process. But option trade executions seem to be very slow)
[ link to this | view in chronology ]