E*Trade is thought to be the first brokerage to promise to reimburse losses for fraud victims.

Brokerage accounts are not protected by the Federal Deposit Insurance Corporation or other banking regulations in the same way online bank accounts are, so customers that fall victim to fraud are not guaranteed recovery of losses.

But E*Trade says its programme will protect customers in the event of online theft committed via unauthorised access to its investing accounts, along with cash management or lending accounts.

Jarrett Lilien, president and COO, E*Trade, told reporters that the fraud protection programme in being introduced in order to persuade more customers to trade and bank online, but this won't happen if they feel that there is risk.

In a statement, Lilien says: "Consumers must be confident that their funds are secure online - in all circumstances".

But he does point out that vast majority of online identity theft and fraud perpetrated against consumers occurs through unauthorised access to personal computers - primarily when consumers fail to use anti-virus software, firewalls and anti-spyware technology.

Lilien says the fraud protection programme includes security upgrades to E-Trade's technology and will cost "tens of millions of dollars" each year.

The E*Trade fraud protection programme already includes token-based two-factor authentication, real-time account validation, anti-fraud/theft monitoring, unique confirmation numbers for all wire and ACH transfers, and discounted security software for customers' PCs.

According to a survey commissioned by E-trade from Insight Express, 77% of Americans believe their financial institution holds primary responsibility - or responsibility equal to the customer - for taking security measures to protect a customer assets.

In November the US Securities and Exchange Commission (SEC) called on online investors to take extra precautions to protect online accounts from keylogging identity thieves following "numerous" cases of unauthorised access.