Last June, before Robinhood became embroiled in the GameStop stock surge, the investment trading app was implicated in the death of 20-year-old Alex Kearns of Massachusetts. Due to a series of errors, the investment app led Kearns to believe he owed $750,000 on a risky stock bet, and the young man received an email demanding an immediate $170,000 payment. When Kearns attempted to reach customer service, all he received was a canned reply that his issue would eventually be looked into, but he should anticipate a delay in response. Fearing that he’d just ruined his life and his family’s finances, Kearns committed suicide. He left behind a note blaming Robinhood for failing to protect a kid who was barely out of high school and placing him in a precarious position that an amateur trader should have never been in.
Compounding the tragedy is the fact that Kearns wasn’t in debt. Had a Robinhood customer service rep gotten back to him sooner, Kearns would’ve been informed that his options were covered. He was notified by email a day after his suicide. While Robinhood has applied some protections following Kearns’ death, his family doesn’t believe the app has gone far enough and has a filed wrongful death lawsuit. News of the suit arrives after Robinhood ran a Super Bowl ad to pull in new users amid their ongoing backlash. Via CBS News:
“We don’t want another family to go through this,” said his mother.
Alex will never know that he likely didn’t lose money on his Robinhood trades. If he had cashed in other options he’d purchased, his lawyers said, he may have even made a profit.
“The information they gave him was just incredibly skewed. And possibly completely wrong, because they make it look like you owe $730,000 when you really don’t owe anything,” said Benjamin Blakeman, one of the Kearns family attorneys. “That could panic just about anybody.”
In light of Kearns’ death, the state of Massachusetts filed a formal complaint against Robinhood in December for its “gamification”of stock trading that is a “deliberate” attempt to lure in young, inexperienced users. In a statement to CBS News, Robinhood denied the state’s claims. “We disagree with the allegations in the complaint by the Massachusetts Securities Division and intend to defend the company vigorously.”
(Via CBS News)