Robinhood users who claimed to have suffered losses during the multiple outages of its trading app and website in March strengthened their allegations against the online brokerage firm.

In the amended consolidated class action complaint, the plaintiffs alleged that the Robinhood trading app is popular among millennial investors because of its "game-like interface.”

The online brokerage firm allegedly combined its game-like interface with “more risky and complex products” such as margin & options trading, which it described as “quick, straightforward, and free.”

Robinhood allegedly lured inexperienced investors into the risky option trading

In addition, Robinhood allegedly made it easy for beginners or inexperienced investors to start trading options. All they have to do is respond to multiple-choice questions.

“Beginners are legally barred from trading options, but those who click that they have no investing experience are coached by the app on how to change the answer to ‘not much’ experience. Then people can immediately begin options trading,” according to the amended class action lawsuit.

Furthermore, the plaintiffs cited a New York Times article stating that Robinhood lured “inexperienced investors into the riskiest trading” by using a “Silicon Valley playbook of nudges and notifications.”

The class members also quoted an analyst at Sumner Capital who pointed out that “Robinhood’s app has slick interfaces” with confetti popping everywhere.” The online brokerage firm treated trading as a game and presented it as an investment.

“Unfortunately for many Americans, losing investment and retirement funds or accruing colossal debt is not a game, and the consequences have been tragic,” as written in the complaint.

In June, a 20-year-old Robinhood user who did options trading committed suicide. In his final note, the young inexperienced investor expressed his anger toward the online brokerage firm and admitted that he had “no clue” of what he was doing. He got depressed and took his own life when his Robinhood account showed he had a negative cash balance of $730, 165. He probably thought he was already buried in so much debt.

Robinhood allegedly abandoned users during the outages

The two firms representing the plaintiffs amended the complaint, which was initially filed on March 4, days after Robinhood’s operating system crashed for almost a day when the stock market experienced a significant upside. The system suffered more outages in March and in June.

The plaintiffs and class members were locked out of their accounts and were unable to execute their trades or exercise their options contracts during the outages. As a result, they claimed to have suffered significant losses.

The complaint asserted that Robinhood failed to provide users meaningful assistance and “essentially abandoned” them during the outages. The online brokerage firm has no sufficient contingency or continuity plan and back-up system for its users.

The plaintiffs accused Robinhood of negligence, gross negligence, breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, violation of California Unfair Competition Law, and unjust enrichment.

A copy of the amended class action lawsuit against Robinhood is available on Law360.com.

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