A U.S. judge has approved a settlement of about $9 million in a lawsuit against Robinhood alleging that the firm’s referral program enabled users to send unsolicited advertising messages to their contacts. Robinhood Financial LLC denied the allegations.
A U.S. judge, Barbara Rothstein, has ordered Robinhood, a website for trading stocks and cryptocurrencies, to pay a $9 million settlement. The company faced a lawsuit over its referral program, which encouraged users to invite friends to join the platform. The judge ruled that Robinhood’s program violated the Consumer Protection Act.
Robinhood Ordered to Pay $9 Million Settlement Over Referral Program
A federal judge in the U.S. Western District Court of Washington has ruled that Robinhood Financial LLC, a firm specializing in crypto and stock trading, must pay a $9 million settlement. This decision stems from a lawsuit filed by plaintiffs Andrew Gillette and Cooper Moore, who alleged that Robinhood’s referral program violated the law.
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The lawsuit, settled as a class-action, required Robinhood to compensate affected parties. Andrew Gillette and Cooper Moore’s legal team received $2.2 million in attorney fees and approximately $142.4k in litigation costs from the settlement fund. Each plaintiff was also granted $10,000 for legal services from the settlement.
Judge Barbara Rothstein clarified that the lawsuit centered on Robinhood’s “refer-a-friend” program, which allowed unsolicited messages to be sent to individuals in Washington State. This violated consumer protection laws, prompting the legal action.
Senior Judge Rothstein deemed the $9 million settlement fair, emphasizing its reasonableness and adequacy given the complexity and costs of litigation. She affirmed that all parties involved had effectively represented the interests of the settlement class throughout the legal process.
Robinhood Referral Program Lawsuit Details
The lawsuit against Robinhood Financial LLC centered on its “refer-a-friend” program, which allegedly violated consumer protection laws. Plaintiffs Cooper Moore and Andrew Gillette filed the lawsuit on behalf of individuals who received unsolicited text messages from Robinhood’s program. These messages were sent between August 2017 and February 2024 to residents of Washington State.
The lawsuit specifically targeted individuals who did not consent to receive these referral messages. However, Robinhood disputed these claims.
Robinhood’s referral program allowed users to send text messages to their contacts through the trading app, inviting them to join the platform. The lawsuit, filed in 2021, argued that these unsolicited messages violated Washington State’s Consumer Protection Act and the Commercial Electronic Mail Act.
Following the approval of the $9 million settlement on July 18, 2024, Robinhood’s stock (HOOD) experienced a decline of 1.8%.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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