Judge orders Robinhood to pay $9M settlement over its referral program

Barbara Rothstein, a United States judge, ordered Robinhood, a stock and crypto trading site, to pay a settlement of $9 million. The company was sued for its referral program, which sought to invite friends to the platform. The judge agreed that the firm’s program violated the Consumer Protection Act. 

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On July 17, a federal judge of the U.S. Western District Court of Washington ordered Robinhood Financial LLC, a crypto and stock trading firm, to pay a $9 million settlement. The lawsuit was filed by plaintiffs Andrew Gillette and Cooper Moore, alleging that the firm’s referral program had violated the law. 

JUST IN: #Robinhood Agrees to $9M Settlement in Class Action Lawsuit in Washington.

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Judge Rothstein orders Robinhood to pay a $9 million settlement

Robinhood has been ordered to settle a class-action lawsuit for $9 million. Gillette and Moore’s counsel received $2.2 million in attorney fees and about $142.4k in litigation fees from the settlement fund. The pair was also granted $10k each in legal services from the settlement fund.

Judge Rothstein clarified that the lawsuit was against the firm’s “refer-a-friend” program. She elaborated that Robinhood’s program facilitated the sending of unsolicited messages to various individuals in Washington State. The crypto and stock trading company violated consumer protection laws, which led to the lawsuit.

Senior Judge Rothstein revealed that she considered Robinhood’s $9 million settlement terms fair. Rothstein added that the terms of the settlement were reasonable and adequate considering the complexity of the lawsuit and the expense. The judge also agreed with the settlement terms, considering the duration of litigation and the risks involved in the process of establishing liability and damages. Rothstein added that the judges, the class counsel, and the plaintiffs have adequately played their roles in representing the settlement class. 

The lawsuit was against Robinhood’s ‘refer-a-friend’ program 

The lawsuit read that the company’s “refer-a-friend” program violated the law. Moore and Gillette filed the lawsuit on behalf of the people who got a referral text message from Robinhood’s program. Rothstein revealed that the individuals received the referral text messages from August 2017 to February 2024 and were residents of Washington State during the stated period.

The lawsuit excluded individuals who gave consent to receive the referral text messages from Robinhood’s “refer-a-friend” program. However, Robinhood denied the claims. 

The referral program reportedly allowed users to create and send text messages to their contact list via the Robinhood trading app requesting they join the trading platform. The 2021 lawsuit stated that these unsolicited text messages violated the state’s Consumer Protection Act and the Commercial Electronic Mail Act. On July 18, the company’s stock (HOOD) fell 1.8% following the approval of the settlement.