Robinhood has agreed to pay $9 million to end a lawsuit brought by people who received “refer-a-friend” marketing messages.

The proposed settlement was filed late last week at the Washington Western District Court.

The document states that plaintiffs Cooper Moore and Andrew Gillette and defendant Robinhood Financial LLC have reached a class action settlement to resolve all claims in the class action lawsuit. The proposed settlement provides a $9,000,000 Settlement Fund for the Settlement Class in exchange for Settlement Class Members’ release of claims related to text messages regarding the Robinhood referral program that were or could have been brought in this action.

The proposed settlement was reached only after extensive and hard-fought litigation. This action was initiated more than two years ago and the parties had briefed several motions and nearly completed class certification discovery by the time they reached a settlement.

The plaintiffs request that the Court preliminarily approve the settlement, conditionally certify the Settlement Class, order that notice be sent, and schedule a Final Approval Hearing.

The Settlement Class is defined as:

“All persons or entities who received a Robinhood referral program text message, and who were Washington residents at the time of the receipt of such text message, between and including August 9, 2017 and the date of Preliminary Approval. Persons and entities who clearly and affirmatively consented in advance to receive Robinhood referral program text messages are excluded from the class”.

Plaintiffs’ Counsel estimates that at least one million consumers with phone numbers containing Washington area codes received Robinhood refer-a-friend text messages.

The Settlement Fund will be used to make payments to the Settlement Class, cover the costs of administering the settlement, and pay any amounts approved by the Court for attorneys’ fees, costs, and expenses, and service awards for the Class Representatives. Each eligible Settlement Class Member that submits a timely and valid Claim Form will receive an equal pro rata distribution from the fund should the Court grant final approval.

Let’s recall that the case, brought by plaintiffs Cooper Moore and Andrew Gillette, focuses on messages that Robinhood clients send to their friends as part of Robinhood’s refer-a-friend campaign. The plaintiffs in this lawsuit are displeased with the fact that they never consented to receive such messages.

The plaintiffs argue that Robinhood substantially assists and supports its users in sending illegal text messages by, inter alia:

1. encouraging and incentivizing its users to send referral messages by compensating them with free stock;
2. technologically enabling its users to initiate referral text messages through the Robinhood App;
3. suggesting which contacts should receive referral text messages when the user uses the “Share Contacts” method;
4. composing the text messages;
5. composing and providing unique user-specific referral links that a text recipient can use to sign up for Defendant’s services; and
6. formulating text and images to be sent as part of the refer-a-friend text messages.