The California Northern District Court has approved a preliminary settlement between Robinhood and a group of traders over data breaches. At a hearing held on August 23, 2022, before Magistrate Judge Susan van Keulen, the Motion for Settlement was approved.

Approximately 40,000 Robinhood customers alleged unauthorized users accessed their accounts since 2020. A majority of these events involved no lost funds or unauthorized transactions, and Robinhood compensated those who did lose funds. Still, the victims incurred various expenses and lost time responding to the hacks.

Plaintiffs filed this case in January 2021 alleging negligence, breach of contract, violations of various state consumer privacy laws and related claims. After two rounds of motions on the pleadings, discovery involving scores of records, and an extensive settlement negotiation process lasting months, the Parties have reached a proposed claims-made Settlement that provides make-whole recovery through payment of up to $260 cash from a pool of $500,000 enough to satisfy all valid claims.

Moreover, it provides 2 years of credit monitoring and identity theft protection activated immediately upon receipt of notice without the need to file a claim form, providing a maximum value of over $19.5 million should all affected settlement class members accept it. The settlement further requires Robinhood to maintain improved data security and customer service practices.

Taken together, these monetary and non-monetary benefits represent a strong recovery when viewed in comparison to what could be achieved through trial, before taking into the account the significant risk, cost, and delay of continued litigation.

The Settlement Agreement provides for a settlement class of “all individuals residing in the United States whose Robinhood accounts were accessed by unauthorized users from January 1, 2020, through April 27, 2022, or who notified Robinhood that their Robinhood accounts were accessed by unauthorized users from January 1, 2020 through April 27, 2022.”

For every Settlement Class Member who submits a claim, the Settlement provides up to $100 for out-of-pocket expenses resulting from the unauthorized access, up to $100 in reimbursement for credit monitoring or identity theft protection services that were purchased based on the unauthorized access, and up to $60 as a payment for time spent responding to the unauthorized access. To apply for an award, Settlement Class Members will be asked to fill out and sign a simple claim form about their losses.

The Administrator also will create and maintain a Settlement Website containing all relevant information and documents regarding the Settlement (including the Long Form Notice, the Claim Form, the Settlement Agreement, Preliminary Approval documents, and the Complaint), through which Class Members can submit electronic Claims Forms.