Like the outlaw Robinhood character, Robinhood Financial LLC has had a long history of legal issues. From 2020 to 2021, Robinhood found itself in a series of hot water situations with the law, and even in 2024, their legal woes seem only to continue.
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However, on July 17, Robinhood finally caught its breath as a United States Federal Judge finally approved a $9 million settlement for the most recent of its class action lawsuits. But the story doesn’t start there; it began on March 14, 2024, when a proposal for a $9 million settlement was made in the case of Moore v. Robinhood Financial LLC.
In that case, Robinhood LLC was accused of assisting its users in transmitting unsolicited commercial text messages to prospective customers as part of its “Refer a Friend” marketing program. In other words, the courts hate ads as much as anyone else, and they had to do something when Robinhood started sending unwanted ads to people who didn’t want to see them.
But that’s just the simple way of putting it. The refer-a-friend program allowed users to generate and send pre-filled text messages to other contacts without first getting an “okay” or a “clear and affirmative consent to receive commercial text messages.” So, again, basically, ads.
Who's Wrong?
At that stage, Robinhood denied any wrongdoing, but it seems the court wasn’t all for their claims. On July 17, the court ordered Robinhood Financial LLC to pay $9 million as a settlement for the referral debacle because the action violated the state’s consumer protection laws.
Judge Barbara Rothstein stated that the settlement terms were fair, reasonable, and adequate “in light of the complexity, expense, and duration of litigation, and the risks involved in establishing liability and damages.” However, Robinhood will certainly not be happy to part ways with $9 million.
As it stands, any person who receives an unlawful text message from the referral program gets $500 per illegal message. As a tip, the court may award an additional payment of up to $1,500, plus other perks like reasonable attorney’s fees and costs. Who knew ads could be so profitable?
Terrell Marshall Law Group and Berger Montague filed the lawsuit against Robinhood on behalf of everyone who received the referral text messages. But if you received a text message, you might want to hold on to your horses for a bit because not everyone who got one will be getting the money after all. Anyone who consented to receive Robinhood referral program text messages will not get out of the settlement money.
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Well, if anything, this settlement will teach those corporations that we don’t really like ads. On the other hand, it’ll teach us that maybe ads can be good after all—just ask anyone who’s getting the settlement money.
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