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E*Trade crashes as Dow soars

Users of the investment service were locked out of online trading for the last hour of the market after a recently installed backup system failed.

As the Dow Jones Industrial Average roared back with a rebound today, users of E*Trade's online investment service were locked out of online trading for the last hour of the market due to the failure of a recently installed backup system.

E*Trade users, however, were offered an alternative backup: the telephone. A message posted to the dysfunctional Web site directed users to call in their trades. At the end of the day the company had an average waiting period of three minutes per trade.

"To be a serious player with a level of customer support and satisfaction, you have to have a high level of redundancy," said senior vice president of marketing Rebecca Patton. In E*Trade's case, redundancy refers to replacement hardware, networks, files, Internet service providers, and customer service representatives that can spring to action when something goes wrong.

Patton said E*Trade was investigating the cause of the breakdown.

E*Trade should know the importance of redundancy. In May of 1996, the site suffered a blackout that wound up costing the company $1.7 million in user compensation for missed trades.

The company has since invested more than $3 million in redundant systems. It has also quadrupled its customer service staff from about 50 to over 200. E*Trade has accounts with four Internet service providers: BBN, PSINet, UUNet, and ELI.

"In May of '96 we did not have the kind of backup system we have today," said Patton. "We even have customer support in both locations so if there were an earthquake in Palo Alto we're backed up."

The Dow today closed at 7758.06, up 153.80 points over yesterday.