Robinhood Settles Class-Action Lawsuit Over Text Spamming with $9 Million Settlement

Robinhood has settled a long-running class-action lawsuit in Washington that involved unsolicited text spamming via its ‘refer-a-friend’ program. A United States federal judge has approved a $9 million settlement in a class-action lawsuit against the crypto and stock trading platform Robinhood. The settlement stems from Robinhood’s “refer-a-friend” program, which allowed users to send unsolicited text messages, violating Washington state’s consumer protection laws.

The lawsuit was filed by Terrell Marshall Law Group and Berger Montague on behalf of individuals who received Robinhood referral program text messages and were Washington state residents from August 2017 to February 2024. The $9 million settlement was approved by Judge Barbara Rothstein of the US District Court for the Western District of Washington. In addition to the settlement amount, Judge Rothstein awarded $2.2 million in attorney fees, bringing the total to $9 million. Robinhood’s stock fell 1.8% in after-hours trading following the news of the settlement but has seen its share prices double since the beginning of the year.

This settlement adds to Robinhood’s legal challenges, as the company faced scrutiny from the Securities and Exchange Commission regarding its crypto trading operations earlier this year. Despite this, Robinhood recently acquired Bitstamp, a prominent crypto exchange, to bolster its crypto ambitions. The settlement highlights the importance of complying with consumer protection laws and the potential consequences for companies that engage in unsolicited marketing practices.