Robinhood is a stock trading and investment app that, in the past two weeks, has been embroiled in a controversy involving its January 27th decision to stop allowing its user to purchase shares in a few stocks, including GameStop Corp. There was immediate backlash from users and politicians who believed that Robinhood’s ban was because of a potential conflict of interest caused by its relationship with hedge funds. Class action law firms jumped into the fray, and within days there were a few dozen class actions filed against Robinhood nationwide.
On January 28th, DoNotPay.com, a consumer-focused online service, announced it was allowing its users to automatically join a class action lawsuit against Robinhood pending in the Southern District of New York. The CEO of DoNotPay.com, Joshua Browder, stated that by the afternoon of January 29th over 400 people had signed up for the class action against Robinhood through the service. Ironically, or coincidentally, DoNotPay.com has been referred to as “The Robinhood of the Internet.”
DoNotPay.com charges a subscription fee of $36 per year. It appears that at least some people signed up for DoNoPay.com just for the opportunity to join the class action against Robinhood. Below is a back-and-forth on Twitter between the CEO of DoNotPay.com and a consumer who had just signed up about technical issues he was having while trying to join the class action.
It has been reported that because of Robinhood’s user agreement, which gives the company the right to cancel, block, and restrict transactions (and even delete user accounts), as well as a clause prohibiting class actions, the class actions have an uphill battle. Also, even when class actions are successful, each class member’s payout is usually only a few dollars.
Under these circumstances, should a consumer-oriented service like DoNotPay.com entice people to join and pay its fees by touting that a user can sign up for a class action against Robinhood? Should DoNotPay.com have mentioned that once a class is established, all members have the right to join – for free? May DoNotPay.com, itself, be open to a class action for enticing consumers to pay to join a class action?