Ameritrade's Privacy Policy

Introduction

I like money. I invest it. I don't want others to have access to it. Ameritrade is an online broker that charges $10.95 per trade. Ameritrade ameliorates my paranoia through their privacy policy by making it easily accessible to the public.

Summary of the Policy

The policy answers 12 important questions.

Explicitly said from the beginning, "By opening an Ameritrade account or by using the Ameritrade Web site, you give your consent to the collection and use of personal information by Ameritrade as explained in this statement." Ok, now that we see this is serious business, I think it's important to read and understand the whole policy.

1. Why do we gather information?
Ameritrade claims that they gather information to provide the customer with an optimum internet trading experience. Most personal information is required for account opening and for the purpose of effective business transactions. They also mention that information such as surveys are used to introduce customers to new services. They make it sound like "it's all for you" when having people subscribe to new services benefits them more.

2. What information do we collect?
Ameritrade claims they gather the usual information (name, address, phone) for purposes of contacting you when doing transactions. Additionally, they claim it is required by law to get financial information such as approximate annual income and approximate net worth. They also review your credit report to see how trustworthy you are and see your "financial position". Things they collect indirectly include IP address, browser type, operating system, transactions placed, products and services used, prior and following websites I view and banner ads I click. This is all done through the use of cookies. What is most intersting to me is "prior and following websites I view."

3. When do we obtain information?
Anything a customer does on the website, Ameritrade collects. Whether it is signing up for the service or placing a trade, Ameritrade keeps a log. They also compile statistics about how much you use the site. External information about you comes from credit bureaus and other business partners. (sneaky!)

4. How do we use your personal information?
Ameritrade uses information you provide to verify a customer's identity and contact info. Everything is linked through your account number to track, organize, and manage your portfolio.Also - they say information gathered is used to " inform you about additional products, services or promotions that may be of interest to you." Demographic information is used to market products and services. (probably advertisements as well). If a customer closes their account, Ameritrade keeps your information on file for "regulatory purposes." (Sounds official, so it has to be ok, right?)

5. What information does Ameritrade share with affiliates, alliances and partners?
Again, vague wording allows Ameritrade to say they do things only to benefit the customer. Regarding information they share with affiliates: "to provide you the opportunity to participate in the products or services our affiliates." Opportunity? Is that opportunity called Junk mail and spam? Ameritrade would be better off defining "personal information" and by saying they share some information but not personal information, I don't know what they are talking about. Examples of companies they share information with include airlines, credit card companies, and other service providers.

6. Do we share the information collected with any other third parties?
Ameritrade doesn't directly make money off of information they share, but they do share information for specific purposes only. Examples include outsourcing questionnaire analysis and marketing. Advertisements that you sign up for as a customer are strictly for offers that you must agree to getting, but I still think that doesn't cover the information they share with affiliates or partners. Ameritrade concludes that third parties are required to maintain strict confidentiality with customer information. They do reserve the right to give any information government agencies ask for, if required by law.

7. Does our Privacy Statement apply to the sites to which we link?
Ameritrade is not responsible for things purchased or acquired, or even personal information shared outside of Ameritrade. Though they track what you click on on Ameritrade's website, what you do on external sites is not the responsibility of Ameritrade. The solution is to familiarize yourself with the privacy policies of those third parties.

8. What steps do we take to protect our clients' personal information?
Ameritrade claims to keep up-to-date with all the latest security technologies and applies them to protect user and financial information from being vulnerable to intrusion. They invest in leading-edge security software. Regarding the customer's account number, username and pin/password: only select few employees have access to this information.Customers are responsible for keeping this information confidential. When doing online transactions, Ameritrade implements encryption and uses Verisign to authenticate that you are actually on Ameritrade's website. Browsers with encryption capbabilities are needed so they aren't leaving out much of their customer base. In this sense, it is the responsibility of the customer to have the right kind of browser.

9. What about "cookies" and other tracking devices?
Cookies are used to verify that you are in fact logged in but don't include a usernames or passwords/pins. Rejecting cookies won't allow you to utilize the features of the website. Cookies from third parties are not the responsibility of Ameritrade. Ameritrade also implements "pixel tags" or transparent gifs that track advertisements you've clicked on. This information is then shared with advertisement companies to target advertisements. Ameritrade reserves the right to allow a third party to send cookies for the purpose of maintaining the site or tracking. They give the name of the company (which will show on the cookie): 2o7.net. Not authorizing these cookies will not prevent you from using the website, however.

10. Can I opt out of sharing my personal information with non-affiliated third parties?
Yes. As mentioned before, they may share non-public information about you with affiliates and third parties.To opt-out you have to send an email to Ameritrade's Client Services with "opt out" in the subject line and account number in the body. For California and Vermont residents, no information is shared unless you "opt in".

11. Can I opt out of receiving certain information?
Certain information includes email newsletters (Client News and Benefits) which are easy to unsubscribe from. Two ways to unusubscribe: send an email in a reply to one of these emails with the subject line "unsubscribe" or go to "Edit My Contact Info" on Ameritrade's webpage and uncheck the "subscribe" box. All "opt outs" you make are only for the account you "opt out" from. (Ameritrade keeps separate accounts for users' money market, retirement and other accounts)

12. Will I be able to review, change or correct my information?
Yes. This is really easy to do through the website or by mail or telephone.

Criteria

1) 1st impression

I read privacy policies from time to time and have a general understanding in what to look for. The coolest thing that jumped out at me was Ameritrade's pledge to me and how they mention that need my trust to be successful, which is true, but it's nice to hear it anyway. Following that is a line that says: "If you have any questions that this statement does not address, please contact an Ameritrade Client Services representative via e-mail at clientservices@ameritrade.com." This shows the company's dedication to its customers and that they are making themselves available for questioning. Ameritrade hereby tells you the easiest way to contact them to get other questions answered. Upon viewing the privacy policy for the fist time, the user also sees a litle "Privacy Monitor" logo. Apparently, Ameritrade is affiliated with this organization that keeps them up-to-date about privacy policies. What I thought was most impressive about this Privacy Montior was that it "Checks to see if the member's information practices are in compliance with its privacy policy." It's sort of a checks-and-balance system, but most likely a prevention measure for them so they are less likely sued. If I were to read only the introductions of privacy policies I'd trust this company completely.

2) Choice

Do I as a customer have a say in how my information is used? Yes, but when signing up, these kind of questions aren't asked because they are already in the privacy policy. I like California and Vermont's approach to having private information shared to affiliates or third parties: you are automatically opted-out unless you choose to "opt-in". Clever, isn't it? Moreover, the most important thing is that my financial information stay secure. Identifying information isn't as important to me as having my money secure, so Ameritrade gets away with this because financial security is usually the first priority of an online trader.

3) Clarity

Ameritrade mentions business affiliates a lot but doesn't specify what kind of businesses these are until later in the policy. The policy could be shortened drastically by not being redundant, but i think they repeat things to get the point across to everyone. The structure of the policy isn't too complex, just longer than it needs to be. The wording is simple enough for a fifth grader to understand. The beauty of a privacy policy is that privacy policies are just the "fine print" of online services. They mention clearly what they do with cookies and even what cookies do. In this sense, they are good at breaking things down for the lay person.

4) Security

Does Ameritrade implement safeguards to protect information from unauthorized access or misuse? Yes, As summarized above, Ameritrade implements the newest and highest encryption standards supported by the most popular browsers to make online transactions secure as possible. They don't mention the bit-encryption or anything, but I'm assuming for a financial service it would at least be 128-bit. This protects the interests of both the corporation and the customer (investor). Additionally, Ameritrade's use of Verisign is a nice feature because it allows customers to verify that the site they are browsing actually belongs to Ameritrade and you aren't being spoofed.

5) Accountability

Ameritrade accepts the things they do and maintain that trust between the customer and the company is very important to them. They are being honest with what they do with your information, but they are being sneaky as well. I find the company accountable because I've trusted them for three years and I haven't lost any money because of theft, insecure services, or been harmed in any way.

Strengths

The policy is easily found on Ameritrade's homepage. The link was where I expected it to be. All important questions I had regarding security and privacy were answered. Also, I have come to the conclusion that I should "opt-out" of any personal information being shared with any future services I sign up with.

Shortcomings

They reserve the right to update their privacy policy without notifying you. Anything that changes in the policy is up to you to keep track of. Quote: "You agree to accept posting of a revised Privacy Statement electronically on the Web site as actual notice to you." Updates are shown under "What's New" but Ameritrade won't contact you directly via email or phone to tell you their policy has changed. Other companies I've seen like AT&T wireless send notifications in the mail. The privacy policy also has too much redundant information which make it a bore to read through, which is probably intentional on their part.

Recommendations

The use of bullets instead of complete sentences might be useful in a summary for people such as myself who don't want to read everything. Ameritrade should also avoid trying to confuse the user by saying things that make it seem like the things they do are in place to "only benefit you." We all know sharing information benefits them much more than it does me. Why would I want to send in 50 credit card offers a week? If they are even partly responsible for these offers I get, they are acting more as an annoyance than a useful service provider.

Citation:

Ameritrade. Ameritrade: Privacy. Oct. 2004. 11 Nov. 2004 <http://www.ameritrade.com/privacy.html>

last updated: November 11, 2004 13:37

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