Online bank and brokerage E*Trade Financial Corp on Tuesday announced a new security system that seeks to protect its customer accounts against unauthorized use.
At a time when identity theft is costing both corporations and consumers substantial amounts of money, E*Trade is introducing a program that uses a digital device that provides customers with a six-digit code that changes at random every 60 seconds.
The brokerage's customers will use the device in tandem with a personal identification and password to access their E*Trade accounts. E*Trade added that the program will become available in the second quarter of this year.
"In addition to the best-in-class security standards we maintain on E*TRADE's own host servers and systems, we are now making available to retail customers an additional and voluntary layer of password security they can deploy on their own computers to address any password access or control concerns that they may have," said Lou Klobuchar, president of E*Trade Financial Services, in a statement.
E*Trade's announcement comes days after a red-faced Bank of America disclosed that it had misplaced computer tapes containing the personal records of more than a million U.S. government employees, including several senators.
Additionally, data profiling company ChoicePoint was hit recently by criminals who gained access to tens of thousands of names and personal details in the company's database.
"The timing (of E*Trade's new device) is propitious just because of the market's awareness, and it certainly was not related to anyone else's problems," Klobuchar said in an interview.
However, "in the marketplace there is a perception that there is a problem because of the stories that have appeared," he added.
Statistics by the Federal Trade Commission estimate that identity-related crimes cost businesses $50 billion a year.