A United States federal judge has approved a $9 million settlement in a class-action lawsuit against the crypto and stock trading platform Robinhood.
On July 17, Robinhood Financial LLC was ordered to pay $9 million to settle a lawsuit regarding its “refer-a-friend” program which enabled the sending of unsolicited text messages in Washington.
Judge Barbara Rothstein of the US District Court for the Western District of Washington agreed with the plaintiff's motion that this violated the state’s consumer protection laws.
The judge also awarded $2.2 million in attorney fees which brought the final approval to a $9 million settlement.
Judge Rothstein stated that she found the settlement terms fair, reasonable, and adequate “in light of the complexity, expense, and duration of litigation, and the risks involved in establishing liability and damages.”
Terrell Marshall Law Group and Berger Montague filed the class action on behalf of all individuals who received a Robinhood referral program text message and were Washington state residents from August 2017 to February 2024.
However, it excluded those who consented to receive Robinhood referral program text messages.
The Robinhood “refer a friend” program allowed users to generate and send texts to their phone contacts via the trading app inviting them to join the platform.
This violated Washington state’s Commercial Electronic Mail Act and Consumer Protection Act, according to the 2021 lawsuit.
Robinhood stock (HOOD) fell 1.8% on July 18 to settle at $24.18 in after-hours trading. However, the trading firm's share prices have doubled since the beginning of this year.
It is not the first time Robinhood has been in legal hot water. In May, the US Securities and Exchange Commission issued an intent to file legal action against the firm, arguing that its crypto trading operations violated securities laws.
Nevertheless, that didn’t stop the company from expanding its crypto ambitions with the acquisition of leading crypto exchange Bitstamp in June.