At E*Trade It's Your Word vs the Computerized Voice Recognition System

Who you gonna believe: me or your interactive voice recognition system?

Well, c'mon, it's 2014. We know how this ends: the machines win, it was probably your fault anyway and that'll be a couple hundred bucks for our trouble.

Actually, it doesn't turn out that way in this case. The company in question, E*Trade, known for ostensibly facilitating market access for the little guy, couldnt produce the backup data and the aggrieved investor won. (I told ya that data stuff would come back to bite us...)

But this raises a more interesting question. At what point does our belief in the efficacy of devices programmed by humans with a demonstrable interest in the outcome exceed our concern for individuals who dispute some sort of result?

Whether it be automated stock trades or ecommerce purchases or some other type of man-machine interaction, we are going to have to get over our bias against the poor machines. To do so, however, those who use those machines for fun and profit (mostly the latter) are going to have to demonstrate that they are worthy of our trust. And good luck with that. JL

David Segal reports in the New York Times:

When asked why he bothered to fight E*Trade — a principle you might not expect to be championed by someone who works for a maker of computers and mobile devices. “It bothers me that a computer’s word is taken as gospel over a person’s,” he said.

The tale starts on Sept. 7, 2012. David de Groot, who works as a tech support guy — a.k.a. a genius — at an Apple Store in San Francisco, calls E*Trade to sell five shares of Apple stock. He uses E*Trade’s I.V.R., or interactive voice response system.

He alleges that he tells the system that he wants to “sell five shares” of Apple. The system apparently hears “sell my shares” of Apple. That, it turns out, is all 119 shares in his account.

Mr. de Groot realizes the purported mistake when he sees an email from E*Trade confirming the transaction. He tries to reverse it by contacting E*Trade, first by email, then by phone and mail. He also visits E*Trade’s office in San Francisco.

E*Trade is unmoved. On Sept. 25, it sends him a letter saying, in part, “A trade inquiry was completed on Sept. 10, 2012, and it was confirmed that the order was properly handled per your instructions.” The most the company would do is refund $19.98 in commissions: $9.99 when the 119 shares were sold and another $9.99 when he bought nearly all of them right back.

Now that voice recognition is a growing part of daily life — it’s built into nearly every smartphone and tablet — the problem encountered by Mr. de Groot is likely to become more common. I.V.R. transactions typically don’t come with the same sort of safeguards that consumers have in regular human-to-human transactions by phone. Most notably, these transactions are rarely saved as audio recordings.

What E*Trade has instead is a computerized log of I.V.R. calls, which are supposed to detail interactions, including what’s known in the biz as “the speed bump.” In the brokerage world, the speed bump is the practice of repeating a trade’s particulars and then asking a variation of “Is this what you want to do?”

Mr. de Groot says the speed-bump question was never posed. “That was the one question I was waiting for,” he said in an interview last week. “Instead, all I heard was that the transaction was confirmed.”

E*Trade, in its response to his arbitration filing in January 2013 — made through the Financial Industry Regulatory Authority — states that he “would have had to say ‘Yes’ or press the ‘1’ key on his telephone to confirm the order.”

Oddly enough, the speed bump seems to be missing from the company’s own log of the transaction.

“E*Trade could have easily included a confirmation step in its call log,” Mr. de Groot’s lawyer, Ross Mitchell, wrote in an arbitration filing, “just as it included the question ‘Another trade?’ with the answer ‘no’ in the log.”

Why would E*Trade lack digital evidence of the speed bump? The Haggler emailed E*Trade and was sent a statement, which the company said could be attributed to “a spokesman.”

“We strive to deliver an investing experience defined on our customers’ terms,” a spokesman wrote. “As a result we provide a variety of ways for customers to place trades — online, via mobile, in person, or over the phone speaking with a customer service rep, or through our I.V.R.

“Each of these systems has safeguards to help prevent error. In the case of our I.V.R., the system repeats the order back to the customer and asks for verbal confirmation before continuing with the transaction — this was the case with Mr. de Groot. We also electronically record the data for all transactions like we do all self-service trading services.”

Wait. The speed bump question was asked? The Haggler requested proof, of any kind, from E*Trade, and “a spokesman” said it did not have further comment.

Regardless, an audio recording would be pretty helpful here. Even E*Trade’s compliance department seems to think so. In Mr. Mitchell’s filing, he quotes a Nov. 7, 2012, email from an E*Trade compliance officer, Akearah Judge, who was researching Mr. de Groot’s initial complaint.

“Would you happen to know how I can gain access to an I.V.R. recording?” Ms. Judge asked in an internal email dated Nov. 12, 2012. “I need to review the recording to confirm exactly how many shares the customer requested to sell.”

E*Trade would not explain why it doesn’t make audio recordings of I.V.R. transactions, but maybe they are cost prohibitive. Certainly, if enough cases like this one accumulate, the outlay would make sense.

But it would take quite a few cases, actually. Mr. de Groot won a complete victory, and even that didn’t amount to a gnat bite on E*Trade’s balance sheet. An arbitrator awarded Mr. de Groot more than $11,000, a sum that reflects compensatory damages and taxes owed on the 119 shares sold.

A principle was at stake, Mr. de Groot said, when asked why he bothered to fight E*Trade — a principle you might not expect to be championed by someone who works for a maker of computers and mobile devices. “It bothers me that a computer’s word is taken as gospel over a person’s,” he said. “Without an audio recording, I had no recourse with E*Trade. There was nothing but a computer, and in this instance the computer misunderstood me.”