Perhaps They Should Have Tested More - Zecco

On April 1, 2009, online brokerage site Zecco increased about 1% of their customers' Buying Power balances by millions of dollars. Some customers thought it was an April Fool's joke.  The real reason wasn't quite as funny.

• the surge in "Buying Power" was an accidental extension of credit to the customers' accounts - actual funds were not deposited therein
• the glitch was due to one of their vendors giving them an incorrect data feed
• some account balances had suddenly grown by $6 million to $14 million
• some executed trades on the lines of credit, including one guy who bought over $1 million in shares
• one customer wondered if he should have spent the money in his account "how am i supposed to know that they are incompetent?"
• the incident caused some users to question the security of their Zecco account information
• the notoriously humor-deprived SEC gave the company a ring

On their web site (http://www.zecco.com/aboutus/FreeTradingBusinessModel.aspx) Zecco talks about how they can manage to offer free and low-cost trades by keeping their costs down.  In a sidebar, they say:

"Also, we don't spend money on:

Superbowl Commercials
Some people think they're funny. Some people think they're SERIOUSLY creepy. We just think they're expensive.

Helicopters
One of our competitors has a pretty cool helicopter in their commercial. Why does a brokerage need a helicopter?

Mass Advertising
Seriously Charlie, take a breath. We do advertise, but we don't plaster the world in "talk" bubbles.

Retail Network
Although we have two beautiful buildings in California for our employees, we don't have hundreds of retail branches across the country. We do everything online and over the phone."

Perhaps one of the other things they "don't spend money on" is testing their data feed system?

According to Zecco:

"We take the integrity of our customers’ accounts very seriously and we have taken measures to ensure this does not happen again."

That's nice.  Perhaps they'll test more.

See also:

http://www.cnbc.com/id/30071918
http://consumerist.com/5200246/zecco-giving-millions-to-customers-was-not-intentional-april-fools-joke
http://consumerist.com/5198894/zecco-accidentally-increases-some-customers-buying-power-by-millions
http://techdirt.com/articles/20090405/2130444402.shtml
http://www.zecco.com/blogs/zeccopulse/Setting-The-Record-Straight.aspx
http://caps.fool.com/blogs/viewpost.aspx?bpid=174313&t=01004382569071098967
http://www.myfoxhouston.com/dpp/business/dpgo_Brokerage_Fools_Users_With_Huge_Balances_SAB_040620092390539