Robinhood Sued for Sending Spam Messages

Fazzaco learned that Robinhood Financial LLC (Robinhood), a US leading trading platform, was sued by a citizen of Washington State named Cooper Moore for allegedly sending spam messages. 

The plaintiff notes that, in order to market its products and services, Robinhood created a referral program called "Refer a Friend". Robinhood encourages users to refer their contacts to the service by offering free stocks for each successful referral. As soon as the user's contact signs up for Robinhood and links his or her bank account, Robinhood credits both the referring user and the referred contact with reward stock—sometimes offering more than one free stock for each successful referral.

Robinhood's mobile application assists users in referring friends. All the user has to do is tap "Rewards" or "Earn Rewards", tap "Invite Contacts", and tap "Invite" next to the contacts the user wants to refer. The Robinhood App also displays alerts to users within the application reminding them to "Invite Friends" to earn free stock.

The refer-a-friend model is a powerful method of mass marketing. At very minimal cost, Robinhood achieves targeted, immediate, and extensive promotion of its brand.

Robinhood's conduct allegedly violated the Washington Consumer Electronic Mail Act ("CEMA"), which makes it illegal to "initiate or assist in the transmission of an electronic commercial text message to a telephone number assigned to a Washington resident".

The plaintiff brings this action as a class action on behalf of persons who also received Robinhood's illegal spam texts.

​Fazzaco reported that nearly one month ago the Financial Industry Regulatory Authority (FINRA) ordered Robinhood to pay approximately $70 million​ for systemic supervisory failures and significant harm suffered by millions of customers. The sanctions represent the largest financial penalty ever ordered by FINRA .