The Legal Side of Robinhood Settlement: A Closer Look for Refer-a-Friend Case
A $9 million settlement in a class-action lawsuit against the cryptocurrency and stock trading platform Robinhood has been granted by a federal judge in the United States. In order to resolve a disagreement pertaining to its “refer-a-friend” program, which allowed for the transmission of unwanted text messages in Washington, Robinhood Financial LLC was forced to pay $9 million on July 17. The plaintiff’s move to declare that this was against the state’s consumer protection statutes was granted by Judge Barbara Rothstein of the US District Court for the Western District of Washington.
Robinhood has agreed to pay $9,000,000 to establish a non-reversionary Settlement Fund for the benefit of Settlement Class Members who filed claims,
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Robinhood Has Faced Legal Troubles Before
The $9 million settlement was ultimately approved by the judge after she additionally granted $2.2 million in legal fees. According to Judge Rothstein, in light of the complexity, expense, and duration of litigation, as well as the risks involved in establishing liability and damages, the settlement terms were fair, reasonable, and sufficient.
Robinhood has previously found itself in legal hot water. The US Securities and Exchange Commission declared in May that it intended to take the company to court, claiming that the company’s cryptocurrency trading activities were illegal under securities regulations. However, that didn’t stop the business from pursuing its cryptocurrency goals, as seen by its June acquisition of Bitstamp, a well-known cryptocurrency exchange.
FAQ
How Did Robinhood Cause a Breach?
Users could create and send messages through the trading app to their phone contacts urging them to join the platform as part of the Robinhood “refer a friend” program. The Washington State Commercial Electronic Mail Act and Consumer Protection Act were broken by this, the complaint from the 2021 case.
What are the Implications of this Case for Robinhood’s Reputation?
This case may lead to some negative perceptions of Robinhood’s user acquisition strategies. However, the settlement and compensation payment may also show the company’s willingness to resolve the issues and fulfill its responsibilities to its users.
How Will Robinhood Users Be Affected by This Settlement?
Robinhood users involved in the lawsuit will receive the compensation amount determined. The settlement also requires Robinhood to change some of its business practices to prevent similar issues in the future.
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