Robinhood settles $9M lawsuit over unsolicited text messages Read CoinChapter.com on Google News
Nairobi (CoinChapter.com) — The US District Court for the Western District of Washington has greenlit a $9 million settlement against Robinhood over unsolicited text messages sent to thousands of residents.
According to a motion filed on July 16, plaintiffs Cooper Moore and Andrew Gillette alleged that Robinhood’s referral program breached the Washington Commercial Electronic Mail Act and the Washington Consumer Protection Act by sending promotional text messages without recipient consent.
Judgment in the Robinhood lawsuit. Source: Reuters Unsolicited Texts Violate Consumer Protection Laws
Robinhood’s referral program enabled existing users to send referral text messages to their contacts, inviting them to join the platform. Recipients who clicked the referral link and signed up received free stock, as did the referrer.
This program aimed to expand Robinhood’s user base and engagement. However, the unsolicited nature of these messages led to legal action.
Judge Barbara J. Rothstein of the US Western District Court of Washington approved the settlement, finding the terms “reasonable and adequate” given the litigation’s complexity, expense, and duration. The class included approximately 827,327 consumers who allegedly received the text messages on a Washington area code telephone number.
Robinhood offers rewards for friend referrals.
The settlement follows over two years of litigation and extensive negotiations. The court-approved notice plan reached 96% of the identified settlement class members, with over 51,000 claims submitted.
Each participating member is expected to receive a cash payment between $111 and $170, depending on the number of validated claims.
The motion stated, “This is an excellent result for the approximately 827,327 consumers who allegedly received Robinhood referral text messages.” The court also approved $2,250,000 in attorneys’ fees and $142,400 in litigation expenses from the settlement fund.
Moore and Gillette were granted $10,000 each in service payments for their roles in the case.
Legal Troubles Persist Amid Robinhood’s Crypto Ventures
Despite the settlement, Robinhood’s stock (HOOD) fell 1.8% to $24.18 in after-hours trading on July 18. However, the company’s share prices have doubled since the beginning of the year.
Robinhood’s stock (HOOD). Source: GoogleFinance
Despite its growth, Robinhood has faced multiple legal challenges. In May, the US Securities and Exchange Commission signaled an intent to file legal action against the firm, alleging that its crypto trading operations violated securities laws.
The company’s legal troubles did not deter its expansion. In June, the firm acquired crypto exchange Bitstamp, reinforcing its crypto ambitions. This latest settlement marks another chapter in Robinhood’s ongoing legal saga.
By addressing these challenges head-on, Robinhood aims to restore trust and continue its growth in the competitive financial technology market.
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