FTC Sees Surge In Robinhood Complaints
The Federal Trade Commission said it received more than 100 Robinhood-related complaints between Jan. 24 and Feb. 2, CNBC reported on Friday (Feb. 5).
The consumer watchdog said some of the complaints stemmed from users saying they are not able to cash out holdings and change to different stock investment firms. By way of comparison, the prior week totaled seven such complaints, the FTC indicated.
The Robinhood trading frenzy saw volumes for GameStop, AMC and others escalate to a point where the FinTech startup said it had no choice but to restrict trading due to the volatility. The limits are now lifted.
Robinhood’s decision to restrict trading was met with backlash from users and lawmakers saying the online trading company manipulated the market. Many of those critics sided with hedge fund managers who shorted those stocks. Robinhood has maintained that it restricted buys to meet capital requirements.
Complaints to the FTC were mostly about trading limits, but some also expressed dissatisfaction with Robinhood’s customer service. Over the past 12 months or so, complaints surfaced over alleged lack of support regarding account hacks or trading issues.
To that end, Robinhood has said it expanded its customer support team and also hired hundreds of registered financial representatives in response to its growing user base, which has surpassed 13 million.
“We are committed to improving the support we provide customers. This is a top priority for us — we’re hiring actively, and have been prioritizing this work,” according to a Robinhood spokesperson, per CNBC.
During the GameStop chaos, some Robinhood clients said they were unable to cash out their accounts in order to move to other trading platforms. One Robinhood user told the FTC the ability to “continue depositing money is still active but withdrawing money or trading stock is completely blocked.”
The debacle now has Robinhood facing more than 30 civil lawsuits. Robinhood’s planned initial public offering (IPO) is on hold following the GameStop debacle.
GameStop shares rose after Robinhood lifted buying curbs. Treasury Secretary Janet Yellen is looking into the rally and will hold talks with other top officials.