The Federal Trade Commission reported there has been an outpouring of complaints filed by users of Robinhood’s investment app since January 24 to February 02. Many aired complaints about not being allowed to convert their holdings into cash; preventing them from transferring to other brokerage firms. More than a hundred complaints were related to the way the company handles concerns being communicated to customer service support.
Still, despite the numerous complaints filed against Robinhood, this company still managed to gain approximately 600,000 new customers in the past week. This info was based on the number of people who downloaded the Robinhood app, whilst signing up as new members. According to a post, the company’s venture capital investors are still backing Robinhood because number of new users definitely surpassed the numbers of those who stopped using Robinhood’s financial services.
Still, several legislators and users accuse Robinhood of manipulating the market by partnering with hedge funds managers that short sell stocks. Yet the company defended that the decision to suspend the recent GameStop buying spree was made based on the need to limit the buy activities in accordance with the capital requirement of Game Stop; and not due to requests made by financial market makers.
SEC Investigations Saw Robinhood Pay $65 Million in Civil Penalty
In a related news last week, the SEC disclosed that in order to work out the allegations of the Securities and Exchange Commission, Robinhood agreed to pay $65 million as civil penalty. The federal agency claimed that in several instances, Robinhood failed to divulge payments received from trading firms to whom the company traded user data. According to the SEC, Robinhood was also filed for not doing its duty of finding the best available terms in executing customer orders.
The SEC settlement was made after William F. Galvin, a top Massachusetts securities regulator, accused Robinhood of violating a state law that prohibits the use of aggressive tactics in luring inexperienced investors. Galvin also mentioned that Robinhood gamified their mobile application to encourage repetitive use of their app and of their service. The financial services company rejected such accusations.
Common Issues Raised with Customer Service
Most of the complaints sent to FTC were about imposed trading limits similar to what happened with GameStop. Complaints also cited users’ annoyance with Robinhood’s poor customer service. User complaints expressed frustrations over customer support whenever they raise issues about limited trading options and hacked accounts.
Not a few users told FTC about their inability to withdraw their money or to trade stock; but they can still deposit money if there is a need. The general consensus is that there is very little chance that the company’s customer service will respond to a a complaint, even after sending multiple emails.
Robinhood’s Response to Customer Service Complaints
Robinhood responded that they recently hired hundreds of registered financial representatives; boasting that last year, they beefed up customer support team by three times. The company claims they did so after learning that their users were already more than 13 million.
The financial services company contends that users can reach them by phone on a case to case basis, but the company considers emails as the best way to communicate problems.