KSL INVESTIGATES

KSL Investigates Customer Complaints Surrounding Popular Trading App Robinhood

Jul 6, 2021, 10:15 PM | Updated: Jul 14, 2021, 3:22 pm

SALT LAKE CITY — Getting locked out of any account can be frustrating but getting locked out of an account where you have thousands of dollars can be terrifying.

That’s why several people from across the country reached out to KSL Consumer Investigator Matt Gephardt after getting locked out of Robinhood – an app that aims to be a “financial system for everyone.”

The complaints started after a KSL Investigates story in April about Robinhood’s lack of phone support for customers experiencing a problem with their account.

Two Customers, Same Problem

Katy Spencer reached out from her home in Houston, Texas, after a hacker accessed her Robinhood account.

“One morning, I woke up and a code was sent to me,” she told KSL. “That means that somebody was trying to log into my account.”

Spencer said she tried changing the password on her account, but the email with the link to do so never arrived. She immediately emailed Robinhood—the only method of communication provided for customer service.

“They got back to me pretty quickly to say, ‘We’ve locked your account’,” she said.

But ten days later, Spencer decided to call the KSL Investigators when Robinhood wouldn’t give any information on her account. By that point, she claimed she had given Robinhood all of the necessary documentation to prove she was the owner of her account.

Her frustration stemmed from discovering the scammer had ordered a Robinhood debit card, and it was sent just days after Spencer emailed Robinhood notifying them of the fraud. “The day after I got an email notification that $5,000 had been taken out of my checking account,” Spencer said.

Linda Preece of Cache County, Utah contacted KSL on behalf of her mother, whose Robinhood account was also taken over by an unauthorized person. Like Spencer, Preece lamented the inability to get answers or phone support from Robinhood.

“I immediately started searching for Robinhood’s support phone number,” said Preece. “There is one listed, but when you call it, they hang up on you. There’s nobody that answers. They say, ‘Please refer to our support online.’”

Preece’s mother had put her savings into her Robinhood account—about $170,000. Despite multiple emails to Robinhood support, she also was unable to get updates on the account.

“It’s been emotionally draining just trying to contact them,” said Preece.

KSL also heard from people in Ohio and Florida who told us when they did an internet search for ‘Robinhood customers locked out of their account’, our initial story came up, prompting them to reach out for help, too.

“It may take longer than usual to get a response”

When we reached out to Robinhood to get answers for Spencer and Preece, Robinhood told us it’s “not able to provide details of customer accounts.”

A spokesperson confirmed the company doesn’t “currently have a way to request a call for customers who are locked out of their account” and pointed us to a link for email support. That link includes a disclaimer: “You can also contact us, but it may take longer than usual to get a response.”

On June 30, 2021, FINRA, the Financial Industry Regulatory Authority, levied a $57 million fine against Robinhood, the largest ever issued, and ordered the company pay its customers $12.6 million in restitution for providing “false or misleading information” on things like options trading, buying power, and margin calls.

FINRA found Robinhood “failed to report to FINRA tens of thousands of written customer complaints that it was required to report.”

We reached out to Robinhood about these punitive actions. Jacqueline Ortiz Ramsay, the Head of Public Policy Communications, provided this statement:

“Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams. We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”

Robinhood was aware of the rise in fraudulent account takeover attempts, pointing us to this tweet about recent phishing attacks on their customers. One cybersecurity firm told Marketwatch that they’ve seen a 250% increase in account takeover fraud from 2019 to 2020.

Protecting Your Money

The good news is we found Robinhood investors are protected from fraud. According to the company’s website, Robinhood “will cover 100% of direct losses due to unauthorized activity” in customer accounts. They list securities and cryptocurrency as protected, as well as requirements for customers to safeguard accounts.

Robinhood is a member of the Securities Investor Protection Corporation—or SIPC. A spokesperson with SIPC told KSL Investigators “unauthorized trading is protected under the Securities Investor Protection Act,” which includes losses “up to $500,000.” This does not include cryptocurrency.

One caveat with this coverage is the requirement for customers to notify their brokerage of fraudulent activity in writing. Not doing so could mean “your eligibility for SIPC protection may be compromised.” However, SIPC coverage does not come into play unless the brokerage is in Securities Investor Protection Act liquidation.

If fraud has occurred from hackers or through a phishing attempt, it is ultimately up to the brokerage to decide if they’re going to reimburse those losses to your account.

As for things like customer service, including the inability to access one’s brokerage account, those can be made to FINRA and the SEC.

Accounts Restored

After our emails to Robinhood, both Spencer and Preece were able to access their accounts once more. Both discovered their securities and crypto had been sold, but Robinhood reinstated their shares. Preece told us Robinhood did not reinstate her mother’s cryptocurrency purchases.

Their frustration remains that Robinhood was less than responsive in their respective situations.

“It’s sad to know that I have to go to a news outlet for help for a company that has a net worth of close to $13 billion,” said Spencer.

Have you experienced something you think just isn’t right? The KSL Investigators want to help. Submit your tip at investigates@ksl.com or 385-707-6153 so we can get working for you.

KSL 5 TV Live

Top Stories

KSL Investigates

...
Daniella Rivera and Annie Knox, KSL TV

Location data cracks open police cases, but critics say there’s a cost to privacy

Utah police are using controversial search warrants to scoop up large dumps of digital data. They can be critical crime fighting tools, but privacy experts warn they're an unconstitutional abuse of technology.
2 days ago
A bus driver fills up at a gas station in Brooklyn on August 11, 2022 in New York City. While fuel ...
Matt Gephardt

Gephardt Busts Inflation: Ways you can save money at the gas pump

Inflation remains high for several reasons and one of the biggest is tied to gas prices. But you can bring down the price you pay with some relatively simple changes in your driving habits.
4 days ago
KSL’s Matt Gephardt fuels up his minivan to determine how much gas Google Maps’ eco-friendly ro...
Matt Gephardt & Sloan Schrage

Gephardt Busts Inflation: Can Google’s eco-friendly routes really save you gas money?

Gas prices have edged down from their record highs, but they are still a far cry from being affordable for many Utah families. So, when Google rolled out a new feature for its Maps navigation app that says it can save you money on gas by using suggested eco-friendly routes, the KSL Investigators decided to put it to the test.
5 days ago
FILE: Back-to-school shopping (Photo by Justin Sullivan/Getty Images)...
Matt Gephardt & Sloan Schrage

Gephardt Busts Inflation: Saving $ on back-to-school supplies with inflation

With inflation running amok this year, parents are tackling big price hikes on top of the stress. Fortunately, there are ways they can still save money.
8 days ago
...
Matt Gephardt & Sloan Schrage, KSL TV

KSL Investigators help bank customer regain access to his money after fraud incident

KSL Investigators help a fraud victim gain access to his bank account after nearly a year of being locked out.
11 days ago
...
Matt Gephardt & Sloan Schrage, KSL TV

What are the rules for airline travel credits?

After canceling a beach vacation to Hawaii, a Utah woman believes she has $1,400 in flight credits. Ongoing flight cancellations have plagued the summer travel season, and a lot of travelers are being made whole with flight credits rather than refunds.
12 days ago

Sponsored Articles

Types of Computer Malware and Examples...
PC Laptops

5 Nasty Types of Computer Malware and Examples | Everything You Need to Know to Keep Your Computer and Family Safe

Here are the different types of computer malware and examples that could potentially infect your computer.
tips how to quit smoking...

7 Tips How to Quit Smoking | Quitting Smoking Might be One of the Hardest Things You Ever Do but Here’s Where You Can Start

Quitting smoking cigarettes can be incredibly difficult. Here are 7 tips how to quit smoking to help you on your quitting journey.
Photo: Storyblocks...
Blue Stakes of Utah 811

Blue Stakes of Utah 811: 5 Reasons To Call 811 Before You Dig When Working in Your Yard

Call before you dig. Even at home, you could end up with serious injuries or broken utilities just because you didn't call Blue Stakes of Utah 811.
Days of...
Days of '47 Rodeo

TRIVIA: How well do you know your rodeo? Take this quiz before you go to the Days of ’47!

The Utah Days of ’47 Rodeo presented by Zions Bank is a one-of-a-kind Gold Medal Rodeo being held July 20-23, 25 at 7:30 PM. The Days of ’47 Rodeo How well do you know your rodeo trivia? Take the quiz to test your know-all before heading out to the Days of ’47 Rodeo at the […]
cyber security through multi factor authentication setup...
Les Olson IT

How multi factor authentication setup helps companies stay safe

Multi factor authentication (MFA) setup is an important security measure that every company should implement for their workers. It’s also wise to install it for your personal and home accounts.
...
Lighting Design

Check out these stunning lamps with stained glass shades

Lamps with stained glass shades are statement pieces that are more than simply aesthetic. They also meet a functional requirement: to light up a room.
KSL Investigates Customer Complaints Surrounding Popular Trading App Robinhood