Robinhood has reached a $9 million settlement to resolve a class-action lawsuit in Washington over unsolicited text spamming through its ‘refer-a-friend’ program.
Settlement Details
On July 17, a U.S. federal judge approved the settlement, requiring Robinhood Financial LLC to pay $9 million for violating state consumer protection laws. Judge Barbara Rothstein of the U.S. District Court for the Western District of Washington ruled that Robinhood’s program, which sent unsolicited text messages, breached these laws. Additionally, the judge awarded $2.2 million in attorney fees, bringing the total settlement to $9 million.
Judge Rothstein deemed the settlement fair, reasonable, and adequate considering the complexities, expenses, and duration of the litigation, as well as the risks associated with proving liability and damages.
Lawsuit Background
The class action was filed by Terrell Marshall Law Group and Berger Montague on behalf of Washington state residents who received unsolicited Robinhood referral texts between August 2017 and February 2024. However, the suit excluded individuals who had consented to receive these messages.
The lawsuit claimed that Robinhood’s referral program, which allowed users to send invitation texts via the trading app to their contacts, violated Washington state’s Commercial Electronic Mail Act and Consumer Protection Act.
Also Read: Robinhood Eyes Crypto Futures Listing in US and Europe
Following the settlement announcement, Robinhood’s stock (HOOD) fell 1.8% on July 18, closing at $24.18 in after-hours trading. Despite this, the company’s share price has doubled since the start of the year.
Robinhood’s Legal Challenges
This settlement is not Robinhood’s first legal issue. In May, the U.S. Securities and Exchange Commission announced plans to take legal action against the company for alleged violations of securities laws related to its crypto trading operations. Despite these challenges, Robinhood has continued to expand its presence in the cryptocurrency market, acquiring the leading crypto exchange Bitstamp in June.
