A man from Kissimmee claims he lost thousands of dollars after using a popular investing app and has been locked out of his account for over a year.
“If things worked out, maybe I’d have a few more bucks for retirement,” Hayward Saffle said.
Saffle wanted to try his hand at investing and signed up with Robinhood Financial, the mobile stock trading platform.
Robinhood claims to make investing simple and affordable. Online the company claims consumers can start building their portfolio with only $1, all from an app on their phone.
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“They offered you know; we will give you five free stocks if you sign up with us and blah blah blah,” Saffle said.
Saffle said several hundred dollars grew to several thousand but claims he has been locked out of his account since March of last year. 10 months later he received a letter telling him his account was locked and his stocks and other investments had been sold.
Saffle said he tried to get answers for months. “Very frustrating. Uh, no response from them.”
In the past two years, federal regulators have ordered Robinhood to pay a total of nearly $135,000,000 in penalties for failing to properly manage millions of customers’ accounts.
In 2020, the Securities and Exchange Commission required Robinhood to pay a $65,000,000 civil penalty.
Last June the Financial Industry Regulatory Authority (FINRA) ordered Robinhood to pay nearly $70,000,000 and accused the company of preventing customers’ access to their accounts, improperly handling trades and giving false information. The report also mentions a 20-year-old who took his life after getting an inaccurate negative cash balance. Robinhood later settled a lawsuit with the family.
Robinhood did not admit or deny the findings in the federal actions.
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“Consumers should not expect the same level of customer service from an app that they would likely get from a more traditional firm,” Micah Hauptman said.
Hauptman is with the Consumer Federation of America, and says apps often use sophisticated tactics to increase engagement. He said that makes them entertaining but can be costly. “More trading and using complex strategies and products are generally not a good thing for consumers.”
Robinhood has an office in Lake Mary. After Action 9 contacted managers, Saffle got a check for $560. He says it is better than nothing but believes he is still owed much more money.
“The old story Robin Hood is take from the rich, give to the poor. Well, this is the opposite,” Saffle said.
Experts we talked to said if you trade on apps, make sure you fully understand the risks. Only trade with money you can afford to lose, and traditional investment products like mutual funds are much safer.
Robinhood did not respond to Todd Ulrich about its history of consumer complaints.