Popular trading app Robinhood is facing its second legal fallout from the recent outage that locked out 10 million users during sharp swings in the stock market.
Attorneys of the lawsuit that was filed in federal court in Florida, and is attempting to gain class action status, asked the judge to stop Robinhood from sending “misleading communications.” The new allegations centered around the “$75 goodwill credit” that Robinhood sent to customers to compensate them for their loss.
Other users have reported that Robinhood is offering three free months of its premium service, which costs $5 a month. While lawyers estimate at least 1 million users were affected with losses exceeding $5 million, they claim such promotions are attempts to confuse and hoodwink customers to take them away from their legal rights.
“We view this type of activity by Robinhood as a calculated attempt to wipe out users’ class action claims without informing the users that they can instead participate in the class action should they so choose” lawyer Michael S. Taaffe said in a statement.
Mr Taaffe also warned the users to be wary of signing on to conditions that would exclude them from joining the class action.
A Twitter account called Robinhood Class Action gained over 8000 followers, many of whom sent in pictures showing the letter they received from Robinhood.
Robinhood has customers with more than 10 million accounts, and a fair number of them were frustrated trying to figure out how they fared during the first week of March 2020. Clients have complained about not having access to their accounts and having long wait times for customer service.
Robinhood clients took to Twitter to air their concerns about the technical issues as the company had been struggling to get back to normal service after a two-day outage is angering customers.
Robinhood’s CEO blamed the shutdown on volatile market conditions, record trading volume and record new account requests which caused stress on the company’s infrastructure.