A US federal judge has sanctioned a $9 million settlement in a class-action lawsuit against Robinhood Financial LLC, the crypto and stock trading platform. The settlement, approved on July 17, resolves allegations stemming from Robinhood’s “refer-a-friend” program, which involved the unauthorized sending of text messages in Washington state.
Judge Barbara Rothstein of the US District Court for the Western District of Washington sided with the plaintiff’s argument that the “refer-a-friend” program by Robinhood violated the state’s consumer protection laws.
In addition to approving a $9 million settlement on July 17, Judge Rothstein also granted $2.2 million in attorney fees, bringing the total settlement amount to $9 million.
She emphasized that the settlement terms were fair, reasonable, and suitable considering the complexity, costs, and duration of the litigation, as well as the uncertainties involved in establishing liability and damages.
The class action lawsuit, filed by Terrell Marshall Law Group and Berger Montague, represented individuals who received unsolicited Robinhood referral program text messages while residing in Washington state between August 2017 and February 2024. Excluded from the class were those who had consented to receive such messages.
The Robinhood “refer a friend” program permitted users to send texts to their phone contacts through the trading app, inviting them to join the platform.
This action was deemed a violation of Washington state’s Commercial Electronic Mail Act and Consumer Protection Act, as outlined in the 2021 lawsuit.
On July 18, Robinhood stock (HOOD) declined by 1.8% to close at $24.18 in after-hours trading. Despite this, the trading firm’s share prices have doubled since the start of the year.
Robinhood has faced legal challenges before. In May, the US Securities and Exchange Commission announced its intention to take legal action against the firm, alleging that its crypto trading activities breached securities laws.
Despite this regulatory scrutiny, Robinhood proceeded to enhance its crypto aspirations by acquiring the prominent crypto exchange Bitstamp in June.
