A court in the state of Washington has given final approval for a $9 million settlement involving crypto and stock brokerage platform Robinhood over its role in sending unsolicited text messages to thousands of residents, according to a motion filed Tuesday.
The lawsuit, filed by plaintiffs Cooper Moore and Andrew Gillette, claimed that Robinhood's referral program violated the Washington Commercial Electronic Mail Act and the Washington Consumer Protection Act by sending promotional text messages without the recipient's consent.
Robinhood’s referral program allowed existing users to send referral text messages to their contacts, inviting them to join the platform. When the recipients clicked on the referral link and signed up, both the referrer and the new user would receive a reward in the form of free stock.
The program aimed to leverage the existing user base to expand Robinhood's reach and user engagement.
"Robinhood has agreed to pay $9,000,000 to establish a non-reversionary Settlement Fund for the benefit of Settlement Class Members who filed claims," the motion reads.
Judge Barbara J. Rothstein of the U.S. Western District Court of Washington approved Moore and Gillette’s motion, stating the court found the terms of the settlement were "reasonable and adequate in light of the complexity, expense, and duration of the litigation."
The class included approximately 827,327 consumers who allegedly received the text messages on a Washington area code telephone number. Law360 first reported the news.
The settlement comes after more than two years of litigation and extensive negotiations. The notice plan approved by the court reached 96% of the identified settlement class members, with over 51,000 claims submitted.
Each participating member is expected to receive a cash payment between $111 and $170, depending on the number of validated claims.
"This is an excellent result for the approximately 827,327 consumers who allegedly received Robinhood referral text messages," the motion read.
Moore and Gillette’s counsel also received court approval for $2,250,000 in attorneys' fees and $142,400 in litigation expenses from the settlement fund. The pair, meanwhile, have been granted $10,000 each in service payments for their roles in the case.
Robinhood, known for its commission-free trading platform, expanded into the crypto market in 2018. Initially allowing users to trade Bitcoin and Ethereum, the platform later added other crypto, including Dogecoin, Bitcoin Cash, and Litecoin.
Robinhood did not immediately return a request for comment.