Robinhood Faces Second 2020 Lashout

Florida attorneys filed a lawsuit against the Millennial-catered trading app Robinhood for misleading communications. The new allegations centered around Robinhood paying its clients $75 to compensate them for their loss in a scandal from early this year. 

Robinhood had paid its clients $75 dollars each that lawyers view as an attempt to wipe out class action claims. Other users also reported that the firm offered them three months of premium service, which is usually $5 a month.

At least 1 million users were affected with losses exceeding $5 million during an in-app outage earlier this year. These participants claim that these promotions are attempts to drive them away from using their legal rights.

Lawyer Michael S. Taaffe said the users can participate in the class action if they chose to do so. Nevertheless, they should be cautious of signing onto conditions that could prohibit them from joining the class action.

Angered clients had a variety of reasons explaining why they joined the class actions. These reasons ranged from trying to figure out how they fared during the trading to not having in-app access altogether.

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The Robinhood Glitches

A Twitter handle called Robinhood Class Action began gathering signatures to sue the firm for their negligence on February 29. The app experienced a system-wide outage on the Dow Jones Industrial Average’s single biggest-point gain since 2009. 

The firm claimed that the outage was not caused by a failure to code for the leap year. However, it also hasn’t confirmed what actually caused it. 

A trading glitch in the same app allowed certain customers to acquire an “infinite leverage” late last year. Some traders turned a $2,000 balance to the purchasing power of $50,000. 

The users exploited Robinhood Gold, which offers traders margin trading and extended-hours trading. When traders sold leverage covered calls, Robinhood ultimately qualifies them to get more leverage.