Investors using social media platforms are vulnerable to online investment scams. If you are engaging in online activities—even relatively commonplace ones like Facebook or YouTube, or if you are posting in chat rooms on forums like Reddit, you are vulnerable to online securities fraud or to being hacked. The Securities and Exchange Commission has published a warning warned that using such media platforms or Iphone apps can expose investors to fraud in the Internet. You may be surprised to learn that your private account numbers or passwords can be sold to fraudsters on the dark web. Criminals are selling credentials for customers of E*Trade, Charles Schwab, TD Ameritrade, Robinhood Financial, and others on the dark web and such fraudulent activity has sharply increased over the past year.
In fact, the dramatic rise of Robinhood users, as well as those trading themselves on other self-directed platforms, has led to an increase of account hacking victims. This is likely due in part to the fact that these brokerage customers are using social media outlets to publicize their investment successes. Robinhood investors who are on the subreddit platform /rwallstreetbets have been known to tout their accomplishments (and failures) online. When an investor appears to be making large sums of money in their online postings, they may draw the attention of bad actors and create “online bait” for securities account hackers. Hackers have been known to look up people’s social media accounts and use this online information (such as birthdates and names of family members) to get information allowing them to easily access the victim’s brokerage accounts. Once they gain access, the hacker can then sell their securities, and transfer out the money to outside accounts that they control. Compounding this issue at Robinhood is that there is no telephone contact provided nor is there the ability to speak in person to a live representative when this fraudulent contact is happening.
Although other online platforms may be subject to hacks, Robinhood is the most vulnerable to hacks. The volume of Robinhood-related emails that are up for sale to users of the dark web greatly outnumbers other brokerage firms by a margin of 5-to-1. Why? Because fraudsters reportedly believe that these accounts were easier to hack. An internal probe by Robinhood found that 2,000 of its customer’s accounts had been hacked.
Robinhood Accounts Were Hacked
Following complaints by Robinhood’s customers that hackers liquidated their investments and withdrew balances from their accounts, a class action suit was brought covering the time period between July 22, 2021 to October 5, 2020 . According to the lawsuit, beginning on or before July 22, 2020 through at least October 5, 2020, Robinhood negligently and illegally allowed unauthorized third-party access to approximately 2,000 customers’ personal and financial information, access to the funds customers had deposited into their Robinhood accounts, and control over securities positions customers purchased through Robinhood. The suit goes on to allege that these unauthorized users viewed, used, manipulated, exfiltrated, and stole this personal and financial information and took control over customers’ accounts so as to rob them of money and valuable securities and harm their privacy. Thus, as a consequence of this negligent and illegal conduct, Robinhood’s customers lost millions of dollars.
In addition, the lawsuit alleges that Robinhood neglected to inform customers of the unauthorized activity for months. Only after reports were leaked by anonymous sources to news outlets did Robinhood disclose that a widespread breach had occurred.
According to the class action complaint, after the hack, many customers tried to contact Robinhood to complain and to determine the source of the breach or request recovery of their funds. Because of their automated systems, these customers found Robinhood was not equipped to timely receive their communications. Surprisingly, there was no phone number to contact a Robinhood representative listed in any materials Robinhood provided or made available to its customers. Instead, customers were directed to email Robinhood and told that a response could take up to three business days. Sometimes, customers waited weeks for a response. While these customers waited for Robinhood to respond to their complaints and concerns, the complaint alleges that the unauthorized users were allowed continued access by Robinhood enabling them to loot their accounts.
And, according to the claims, despite promises otherwise, Robinhood has “failed to compensate millions of dollars of losses claimed by those affected by the breach.” Without explanation, the complaint alleges, Robinhood emailed customers who lost thousands of dollars in the breach informing them they would not be compensated for their losses.
Robinhood Agrees to Reimburse Your Losses From Unauthorized Activity
Robinhood purports to be a “Safety-First company.” Representing to its users and potential users that “ We want you to feel confident and secure.” On its website and app, Robinhood commits to the highest security standards and states that “We will cover 100% of direct losses due to unauthorized activity in your accounts.” This means that you should be reimbursed if you are not negligent with your account information.
However, this is not always the case. As stated in the class action complaint, Robinhood does not always reimburse its customers for the damages caused by account hacking. If your Robinhood account has been hacked, you may be entitled to damages.
HAS YOUR ONLINE ACCOUNT BEEN HACKED? YOU MAY HAVE LEGAL RIGHTS.
CONTACT US TODAY FOR A FREE CONSULTATION
If you or a loved one have suffered investment losses as a result of your online account or app being hacked, or any other type of investment fraud or broker negligence, contact the offices of Investment Fraud lawyer Melanie Cherdack for a free consultation. Because she has been in the trenches as a former Wall Street attorney, Melanie Cherdack and her team of experienced attorneys have seen just about every type of investment fraud or investment scam. While almost every investment carries a degree of uncertainty and risk, you may have been unnecessarily exposed to such risk. Former Wall Street securities attorney Melanie S. Cherdack and her team of lawyers represent individual and institutional investors who are unwitting victims of investment fraud and broker negligence. She heads up a group of attorneys who represent investors across the United States. Contact us by filling out our online contact form, or calling 844-635-1609 or 305-349-2336.