A U.S. federal judge has ordered Robinhood Financial LLC to pay $9 million in a lawsuit over its referral program that sent unwanted text messages in Washington. The lawsuit, filed in 2021, claimed the program violated the Washington Commercial Email Act and the Consumer Protection Act.
The settlement includes $2.2 million in attorney fees and benefits around 827,327 consumers. Judge Barbara Rothstein deemed the settlement fair due to the complexity, cost, and risks of litigation. The case marks a significant milestone as it underscores the legal risks associated with referral marketing programs.
Robinhood’s referral program allowed users to send messages from their phones, inviting contacts to join the platform. The company also received a Wells notice from the SEC about potential securities law violations, adding to its regulatory challenges.
Despite these issues, Robinhood plans to expand by offering cryptocurrency futures in the U.S. and Europe and acquiring Pluto Capital Inc. This strategic move highlights Robinhood’s resilience and ambition to diversify its services.
