- Robinhood settles $9M lawsuit over unsolicited texts, emphasizing compliance with consumer protection laws.
- Legal settlement highlights Robinhood’s expansion into crypto despite regulatory challenges.
- Despite legal costs, Robinhood stock prices show doubled growth in 2024.
Robinhood Financial LLC has finalized a $9 million settlement in a class-action lawsuit concerning its “refer-a-friend” program, which involved the sending of unsolicited text messages. Approved by Judge Barbara Rothstein of the US District Court for the Western District of Washington, the settlement resolves allegations that Robinhood violated state consumer protection laws.
The lawsuit, filed by Terrell Marshall Law Group and Berger Montague on behalf of Washington state residents, targeted Robinhood’s practice of sending promotional texts without recipients’ consent. These texts were part of Robinhood’s referral program, where users could invite contacts to join the platform in exchange for rewards.
US SEC Pushes for $102M Settlement with Ripple Amid XRP DisputeAccording to court documents, approximately 827,327 consumers received these unsolicited messages between August 2017 and February 2024. The plaintiffs argued that this violated Washington state’s Commercial Electronic Mail Act and Consumer Protection Act, prompting legal action seeking compensation and an end to the practice.
Judge Rothstein, in approving the settlement, emphasized its fairness and adequacy given the complexities of the case and potential risks of prolonged litigation. The settlement includes a $9 million fund for affected consumers, with individual payments expected to range from $111 to $170 depending on validated claims.
In addition to compensating consumers, Robinhood will cover $2.2 million in attorney fees and litigation expenses. The settlement marks a significant development in the ongoing legal challenges faced by Robinhood, which has expanded beyond traditional stock trading into cryptocurrencies like Bitcoin and Ethereum.
Despite this settlement, Robinhood continues to navigate legal scrutiny. Earlier this year, the company faced allegations from the US Securities and Exchange Commission regarding its crypto trading operations. Nevertheless, Robinhood remains active in the crypto market, recently acquiring Bitstamp, a major cryptocurrency exchange, as part of its expansion strategy.
Robinhood’s stock (HOOD) saw a slight decline of 1.8% in after-hours trading following the settlement approval, settling at $24.18 per share. However, the company’s stock prices have doubled since the beginning of the year, reflecting ongoing investor confidence amidst regulatory challenges.
