TLDR
- Robinhood agrees to a $9 million settlement over unsolicited text messages from its referral program
- The lawsuit claimed Robinhood violated Washington state laws on electronic communication and consumer protection
- The settlement covers about 827,327 consumers who allegedly received text messages between August 2017 and February 2024
- Each participating member is expected to receive between $111 and $170
- Robinhood has expanded its crypto offerings and is now available in all 50 US states, Puerto Rico, and the US Virgin Islands
Robinhood, the popular trading platform for stocks and cryptocurrencies, has agreed to pay $9 million to settle a lawsuit over its referral program.
The case, filed in Washington state, claimed that Robinhood sent unwanted text messages to thousands of people.
The lawsuit said Robinhood broke Washington’s laws about electronic messages and protecting consumers. It focused on the company’s “refer-a-friend” program, which let users send texts to their contacts inviting them to join Robinhood.
When someone signed up through a referral link, both the new user and the person who invited them got free stock.
Judge Barbara Rothstein of the US District Court for the Western District of Washington approved the settlement on July 17, 2024. She said the terms were fair and reasonable, considering how complex and long the case was.
The settlement covers about 827,327 people who allegedly got these text messages on Washington area code phone numbers between August 2017 and February 2024. People who agreed to get the messages are not part of the settlement.
Each person who filed a claim is expected to get between $111 and $170. The exact amount depends on how many valid claims are submitted. Over 51,000 claims have been filed so far.
The lawyers who brought the case will get $2.25 million in fees and $142,400 for expenses. The two main plaintiffs, Cooper Moore and Andrew Gillette, will each receive $10,000 for their role in the case.
This settlement comes after more than two years of talks between Robinhood and the plaintiffs. The court’s approved plan to notify people about the settlement reached 96% of those affected.
While dealing with this lawsuit, Robinhood has been growing its cryptocurrency business. The company started offering crypto trading in 2018 with just Bitcoin and Ethereum. Now, users can trade 15 different cryptocurrencies on the platform.
Robinhood announced that its crypto trading service is now available in all 50 US states, as well as Puerto Rico and the US Virgin Islands. This move puts Robinhood ahead of some competitors in terms of where it can offer services.
However, Robinhood’s growth in crypto hasn’t been without challenges. In May 2024, the US Securities and Exchange Commission (SEC) said it might take legal action against Robinhood. The SEC thinks the company’s crypto trading might not follow securities laws.
Robinhood is pushing forward with its crypto plans. In June 2024, the company bought Bitstamp, a well-known cryptocurrency exchange. This purchase could help Robinhood offer more services to larger investors.
The settlement of this lawsuit and Robinhood’s continued expansion show how the company is navigating legal issues while still growing its business. As the cryptocurrency market keeps changing, Robinhood seems determined to be a major player in both traditional stock trading and the world of digital assets.
