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Robinhood froze my account and kept my $3,000 inside! Is this legal?

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Michelle Couch-Friedman

Consumer reporter and ombudsman

Robinhood, the online millennial-focused brokerage site, brags that “Investing is simple here.” That sounded great to Bryan Santer when he was looking for an easy way to invest some cash. So, he followed the onscreen prompts, transferred $2,400 into his Robinhood account and prepared to make his first transaction.

Of course, as is true with any investment, Bryan knew there would be some risk involved. But what actually happened, he never saw coming. That simple investment he hoped to make turned into an instant nightmare. Robinhood accepted his money, immediately froze his account, and refused to explain why.

That was four months ago.

Since then, Bryan has been in an ongoing, highly emotionally charged battle with Robinhood to retrieve his $2,400. But now he’s reached his limit. Bryan is hoping our advocacy team will join this fight and convince Robinhood to give him back his money.

Can we do it?

Robinhood: “Investing is simple here.”

Last November, Bryan had been reading about the Sweetgreen company, a restaurant/cafe chain dedicated to healthy eating.

I received my stimulus check, and I thought Sweetgreen would be a great company to invest in. So I transferred $2,400 over to my Robinhood account, and I thought the whole transaction would be simple. I had read good things about the potential for that stock, so I wanted to make the purchase ASAP.

But it quickly became apparent that Bryan wouldn’t be investing in Sweetgreen. He would miss that opportunity because Robinhood had other ideas for his money.

As it turns out, for Bryan, investing wasn’t simple at all with Robinhood – in fact, it was impossible.

“Your money will be frozen for 60 days while we investigate.”

First, Bryan received a message that Robinhood wanted to know the origin of his money.

“I received messages that the company needed statements from my bank account and identification,” Bryan explained. “I gave them all of that, and then I waited.”

Bryan assumed that all of these requests were just a formality and that he would soon get to the “simple” part of investing with Robinhood. But with each additional piece of information the company requested, it became less and less simple.

Then came the message that, based on everything Bryan had presented, Robinhood had determined that it would need more time. The company explained that it would be holding his funds for 60 days while it completed its investigation.

That money was my stimulus check, and now Robinhood was telling me they intended to hold my cash in limbo for 60 days. I couldn’t believe it. I asked them just to give it back. But the company refused.

Bryan was stunned. But he shouldn’t have been. Robinhood isn’t the only company that can get hold of your cash and keep it for extended periods during an “investigation.” We’ve been warning consumers that PayPal and Venmo both have clauses written into their terms and conditions that allow the freezing of accounts for up to 180 days for nearly any reason.

Faced with no other choice, Bryan waited out the 60 days.

Robinhood: No account for you!

After the holidays, when the 60 days was finally up, Bryan still hadn’t heard from Robinhood. So he sent a follow-up asking when the company would release his $2,400.

Bryan found customer service to be impossible to reach.

“There is no phone number, and the messages I sent would go unanswered for a long time,” Bryan reported. “Finally, I received an email that Robinhood would not reopen my account.”

Robinhood, the investment app, suddenly locked this user's account with his $3,000 inside! Is this legal and can we help?
Robinhood: We’ve deactivated your account — (with your money inside).

Bryan was angry. The company had been holding his money for over two months, and now the company’s investigation ended with no explanation.

“Where is my money!?” Bryan asked.

He hoped Robinhood would return his money, and then he never wanted to hear about the company again. But the brokerage firm wasn’t quite done with him. Nor did it intend to give him back his $2,400 just yet.

Bryan still had a battle on his hands.

“We can’t facilitate this type of account activity.”

In response to his request about the fate of his funds, Bryan received an ominous email from a first-name-only customer service agent.

Hello Bryan,

Thank you for your patience. Based on the information provided, we will no longer be able to support your account.

This is a final decision, and your account has been deactivated.

All remaining funds have been reverted back to the source from which they were originally transferred.

Any funds that continue to arrive into your account will be rejected automatically and sent back to the sender. Your account is now permanently deactivated.

Thank you for your assistance during your account review. We regret these circumstances, but we simply cannot facilitate this type of account activity.

Sincerely,

Kristin, Robinhood Support

Bryan couldn’t believe what he was reading. The only thing he had tried to do with Robinhood was to invest in Sweetgreen. He never even got beyond step one – transferring money into the account.

“I have no idea what kind of account activity this email is referencing,” a frustrated Bryan lamented. “I just want my money back now.”

And even though the Robinhood representative claimed the company had returned Bryan’s money, it hadn’t. His bank confirmed no incoming or pending transactions from the brokerage site.

For the next month, Bryan sent email after email asking Robinhood to send back his $2,400. Each time, in response, he received the same message as Kristin sent. He was getting nowhere — fast.

Then one day, scrolling through the internet, he came across an article I had recently written about a consumer struggling to retrieve money lost through the Zelle app.

That’s how he learned about our advocacy team, and he decided to submit his request for help.

Will Robinhood return this money?

When I first read through Bryan’s request for help, I thought we likely couldn’t help. Often when banks or cash apps freeze a consumer’s account, it’s because the customer has run afoul of the terms and conditions. They may be using the service in a way that violates the rules of the platform. But in general, those companies will not discuss specifics about frozen accounts with our team (citing banking and other customer privacy laws).

I explained all of this to Bryan, but he wasn’t willing to give up.

Michelle –

I received your email today and still hope you can help me.

The Robinhood team tells me a different story almost daily about why I don’t have my money.

They are now saying that my Nov. 15 transfer into Robinhood ($2,400) has not cleared yet as of today.

They’re lying. They have always lied to me.

Please take this on.

Sincerely,

Bryan Santer

That didn’t make any sense. No previous emails had mentioned that his original deposit hadn’t cleared. And where had the money gone if it wasn’t with Robinhood or Bryan’s bank?

When I reviewed the paper trail, it seemed to me that nearly all the correspondence may have been auto-generated. We know that, to the great detriment of their customers, many companies have outsourced human customer service.

And this looked like an extreme example. Robinhood had been holding Bryan’s $2,400 for nearly four months. Now, in the latest email, the company didn’t seem even to know where the funds were.

I decided to reach out to Robinhood and see if we could get to the bottom of this investment fiasco.

Putting an end to this Robinhood fiasco.

Never having had a case involving this brokerage company before, we don’t have an executive contact there. And it wasn’t easy finding a real person in the company to reach. But I tracked one down.

Hello there! We were contacted by a (former) client of Robinhood, Bryan Santer, who had an experience that he hoped we might be able to assist him with. He opened an account with Robinhood some time ago but deposited $2,400 into this account on Nov. 17, 2021, and his account was quickly frozen. Mr. Santer was asked to provide a variety of documentation to show where the money was coming from… A T-Mobile Money account (Parent bank is Customers Bank). However, Mr. Santer has still not received his money back despite RobinHood’s customer service informing him that it was sent back to the original account.

Mr. Santer would like clarity about whether his money is still with Robinhood or if it was actually sent back to his T-Mobile account. Can you help?

Michelle to Robinhood

And much to my surprise, Bryan’s battle came to a swift and positive end.

The good news: Your account is open – with your money included.

Very shortly, I heard from Bryan. Although the executive at Robinhood did not directly respond to me, Bryan received a phone call from the company. He received an apology and an assurance that his account was open and ready for trading. His $2,400 was there waiting as well.

Robinhood apologizes and reactivates the account after I contacted the company about this user's situation.
Robinhood reactivates the frozen account and Bryan has access to his money again.[

Bryan is relieved to finally have his cash back and end this fight. While he appreciates that Robinhood has finally corrected the problem and returned his money, he likely won’t be entrusting any more of it with the company.

Oh, and he has a suggestion for anyone considering using Robinhood because of its claim of “simple investing”: Don’t believe it.

Robinhood: Important things to consider – before you hand over your cash.

Apps like Robinhood make it easier than ever for amateurs to get into the investing scene. In fact, advertisements for the company show young adults casually strolling down the street and other places, making investments with the app. Unfortunately, many of these investors are naive, with little understanding of potential pitfalls.

Here’s what you need to consider before handing over your cash to Robinhood or any other online brokerage firm.

  • Read the terms and conditions.
    We all know that the terms and conditions of most companies – including Robinhood – are long and tedious to read. But there is no way to know if you do actually agree to those terms unless you read the entire document. The time to find out that you disagree with any part of that agreement is before, not after the company is already in possession of your money. Remember, not reading or fully understanding the TOS will not be an excuse that will help you should you run into problems later. Read that document.
  • Turn on two-factor authentication.
    Most Robinhood investors access their accounts via an app on their phone. As is true with all app-based services, the user is responsible for keeping their account safe from unauthorized access. To reduce the chances of anyone gaining access to your Robinhood account, here’s how to turn on two-factor authentication.
  • Research: Make sure you understand what you’re doing.
    One of the problems with making investing so easy and simple for the masses is that novice users may impulsively purchase stocks with little thought. They may also participate in risky transactions with a minimal understanding of the process or the potential loss. This can lead to tragic consequences, as in the terrible case of Alexander Kearns. The 20-year-old Robinhood user believed he had somehow made a nearly million-dollar mistake and could not reach customer service to tell him differently. He committed suicide before anyone from the company returned his plea for help. (Robinhood has since settled a lawsuit concerning Kearns.) If you have a child or grandchild dabbling in investing, it’s essential that you help them understand the dangers. And even though the Robinhood app can facilitate instant investments, users should only do so after thoroughly researching their intended stocks and transactions. Websites such as Motley Fool can provide investing guidance to inexperienced investors.
  • Think long-term.
    In this era of instant gratification for nearly everything, it’s crucial for the (primarily millennial) Robinhood users to think in the long term. Investing is not a quick venture. And although an app like Robinhood makes it possible to check and obsess about your investments multiple times per day, that isn’t a good plan. Read, research, and learn about the companies you’re investing in, and realize you’re in a long-term game. (Michelle Couch-Friedman, Consumer Rescue)
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Michelle Couch-Friedman

Michelle Couch-Friedman is the founder and CEO of Consumer Rescue. She is a consumer advocate, ombudsman columnist, mediator, writer, and licensed psychotherapist. Michelle is a public speaker, and her expert guidance has been cited in MarketWatch, Consumer Reports, Travel & Leisure, The Wall Street Journal, Newsweek, Popular Science, CNN, CNBC, Boston Globe, CBS News, National Geographic, Travel Weekly, Reader's Digest and more. You might even catch Michelle on TV reporting on a situation. :) Michelle is also the travel ombudsman columnist for The Points Guy and is the former executive director of the nonprofit Elliott Advocacy. During her six years in that position, she resolved thousands of cases for troubled travelers and other consumers. You can read hundreds of 5-star reviews Michelle earned during her service to the nonprofit since 2016 here on Great Nonprofits. She is also a member of the Society of American Travel Writers. Today, she continues to spend as much time as possible fiercely defending consumers and traveling the world with her family. Contact her at Michelle Couch-Friedman or on Linkedin, Twitter or Facebook.
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DChamp56

Wow… what an awful company!

Michelle Couch-Friedman

I’ve received several additional similar complaints since we first published this article. It seems like a bot of some time freezes the accounts and no one is actually looking at the facts.

London

Hello, this happened to me too. My mom just died a horrible death of cancer. She had life insurance and left it to me. I put a large amount in robinhood..I’ve had this account for 3 years. My verified funds, and verified account all of a sudden needed to be reviewed again. They said I am now denied. Now they’re suggesting I file a claim with my bank to have the money reversed and who knows what happens with the interest. Im so depressed with my mom dying that this has barely fazed me. However I’m sure it will eventually. I hate life right now.

Michelle Couch-Friedman

Hi London. I’ve very sorry to hear about your mom. If you would like us to have a look at the situation with Robinhood, send your details through this form: https://consumerrescue.org/gethelp/

Xianhui

Wow, I’m having the same issue. Is there anyway you can help? They have 6,700 of my money. I’ve provided my ID, bank statement, and even a live face identification. Other than that they’ve given me little to know information. They’ve restricted my account more than six months ago. I never received an email telling me why and when I spoke to support over their chat system, they would only tell me they would escalate it to a different department. Do you think you could help me?

Michelle Couch-Friedman

Hi Xianhui, We’ll be happy to investigate. Please send our team a request for help through this form: https://consumerrescue.org/gethelp/. Thank you.

Michelle S

Hello,

This is what exactly happening to me. They restricted my account for no reason. I provided my drivers license, a selfie, SSN card and bank statements. I contacted Robinhood plenty of times and all I get is finger pointing and because I contacted them too many times they blocked me from request a chat nor a call. It seems to me that they making excuse so they can hold the funds. It is very frustrating! This the kind of service they give to military families! All I want is get my money back and close the account. I absolutely don’t want anything to do with Robinhood. Please help…

US Army Wife of over 20years

Garrett Cuppels

This literally is verbatinm what just happened to me. I do not know who to contact to get this issue resolved. I have sent emails upon emails to Robinhood with copies of my bank statement which clearly shows the money is legitamate yet they claim they can not verify my infomration and therefore I am not entitled to my money back. It is only 12K but it is more the principle of essentially calling me a fraud and then keeping my money punatively which I have to believe is illegal. Furthermore, I have found they are guilty of doing this as far as I can tell for over 3 years w/o legal action to reimburse the victims so this needs to be investigated.

The summary of what has occurred is as follows:

1. I have had an account with them since 2017 and never had any problems.
2. Recently I was required to verify my account online through their website with my ID and selfie scan. This was approx 2 weeks after transferring 12K to RH bc their cash account earns 4% interest.
3. I was notified via email that they are unable to verify my information so they deactivated my account
4. Before I could respond they liquidated all the assets in my portfolio and a small amount was transferred to my BOA bank account which is one of 2 that I have connected to their site.
5. The remaining 12K in my account was frozen and I could not transfer the funds back to the bank account of origin (LendingClub bank) despite my efforts to prove my information is legitimate
6. I have made multiple attempts (over 4 weeks) to contact customer support via email and their online chats without resolving the issue or providing any reason why my account was deactivated in the first place.
7. Yesterday, I received an email from them stating they were unable to verify the legitimacy of my remaining funds and therefore, no funds were going to be returned to me (12K) Essentially, they have stolen funds from me that are legitimate and are now holding them hostage.

Xiomara

They told me the exact same thing. What can we do

Henry Bassett ( nick)

I am having the same experience but with a smaller amount of money they haven’t yet said they’re not going to be returning it, but every email indicates a little flavor that they’re getting ready to say that they’ve deactivated. My account says that I can no longer do business with Robinhood they say unusual activity, they’ve asked me to fill out the forms proving who I am over and over again even after saying that I have submitted all necessary then they would start the process all over again as if they never received the information. It’s very frustrating to be treated like a criminal and when I asked if they could explain what the unusual activity was, they said that they are not required to do that , I filed a complaint with the Better Business Bureau and we get the same form letters that I originally got. They say say that my case will be resolved within 48 hours every time and it’s been three months now please help us if this is happening to us it must be happening to other people , and it’s just wrong for any company to be able to treat people this way yes I want my money back but it’s more about the principle please help I feel so powerless

Xiomara

I been having the same situation, i investing over 85k, i transferred 10,000 out and they all of a sudden deactivated my account. I called my bank to file a claim because no one will respond from Robinhood. Later they send an email stating they confirmed fraud. They don’t know where my funds came from. But when I transferred money into there account they gladly received them. All i want is my money but it looks like all Robinhood copy and paste answers. Please need help.

B Gleibs

Hi thanks for this article …. I have the same story as you have written with 100k locked up and no one to reach. I filled out the form for you to help any way you can please let me know what To do ?? Ty !

richard jackson

this just happen to my girlfirend and what did everyone do. is there legal action we can take

Michelle Couch-Friedman

You can submit your request for help to Consumer Rescue. We’ve been having a fabulous reopen success rate for consumers as long as there is not anything going on illegal.

Tanmayee Fatate

Hello Michelle, I submitted a request for help. Could you please look into it and let me know if you’re able to help!
Thank you very much!

Michelle Couch-Friedman

I did respond to you from [email protected]

Manpreet Heer

Robinhood freeze my account and kept my “$53,636.78”.
They are telling me that I won’t able to withdraw my funds.

Tanmayee Fatate

I am in the same situation. Robinhood deactivated my account and then sold my stocks worth ~$50k. They told me that they are not able to verify the legitimacy of my account. Anyone found a solution yet? Is there any legal action we can take?

Paige

Help! The same thing happened with me but 17K, please let me know how to solve this

Moe

Same here, not sure what else I should do.

Will Wampler

Same issue here. Accn was under review then my investments were liquidated now I can’t withdraw the funds in y permanently deactivated account.

Will Wampler

Last email I received.

Hi ,

Good day! I hope you are doing well and staying safe. This is Cathy one of the support here in Robinhood.

Thank you for your patience. Unfortunately, we have made the decision to close your Robinhood account. We reserve the right to this as part of our terms and conditions which you can read about here.

We are unable to verify the legitimacy of the remaining funds on your account. Therefore, no money remains to be returned to you.

If for any reason you do need to get in touch, feel free to reach out to me or our support team.

Apologies for any frustration or inconvenience caused.

“We appreciate that you have been very patient and cooperative. We want to help where and whenever we can, for clarification or questions feel free to reply to this email or you may also check out our Help Center article for additional information. I’m always here to help.”

MASTON

please same thing happened to me the closed my account and sent me same email you got and they are saying they are not releasing any funds to me and i have $15700 in there please i need help

Christian L Colbert

The same thing happened to my account. What is our recourse? It’s a sad state of affairs when trying to get help from Robinhood. They send back computer-generated messages… the same ones every time. Anyone know how to get your money back?

Christian L Colbert

The same thing is happening to my account. There is no communication from Robinhood as to why they restricted the account, other than generic computer generated messages. Anyone have a clue as to what can be done to keep Robinhood accountable?

Richard Hemingway

wow this sounds bad, I haven’t experienced this issue yet, but I’m getting very close to the 30,000 dollar mark that 95 percent of these cases seem to have in common. we’re any reasons provided for freezing accounts? Did these people do something that seemed fishy?

A Hami

I’d stay away from RobinHood as on top of having these issues, if you actually receive a live person they barely speak English. They are fighting on wanting my bank to produce a letter on a closed bank account that I havent used in months, but at one time linked to Robinhood. Then they are upset that my bank produced a physical letter versus an email (which my bank Chase noted it does not do ) When things happen like this, it makes you wonder if they cannot afford to release your money as short funds so makes up these ‘needed items’ to stall same! I’d only use RH, if still using, on transactions under 1,000 that is if you can afford being without the money for weeks.

Gianni Rodari

Stay far away from these criminals. They are doing everything they can
to take your money. Robinhood is unreliable. Not only are they selling
stocks at the highest market rate and pocketing commissions, but they’re
also committing other offenses, such as holding your funds indefinitely
without any given reason. Robinhood operates like a crime syndicate,
and one day they will be shut down. Their BBB rating is D-, and they
face many lawsuits. I am filing a lawsuit this week.

Millie

Well It just happened to me today. I had just transferred some more money into my account and had $4,100. when I tried to make a purchase and they restricted my account, no reason no thing. Then I get an email it was deactivated, this has gone on for about 2 week now. Today I get another email that my account is closed. They can’t verify the legitimacy of the remaining balance in my account so nothing is being returned to me. WTH. obviously there are funds in my account, and they can see it came from my bank account. How can they say the funds can’t be verified. Has anyone been able to do something. I’m furious right now how these people think they can just keep your hard earned money

Christon

DO NOT TRADE ANYTHING ON ROBINHOOD.COM

I’d been trading issue free for several month without incident. But I’ve two coins on the server in anticipation of a spike. Without warning cause or even a reason why they’ve restricted my account for absolutely no reason at all.

THERE IS NO CUSTOMER SERVICE. Not one phone number, way to chat or even email if there is a problem. ALL of the phone numbers you see listed online connect to phone scams. The person tries to get you to send “verifying’ funds to a random wallet, the address for which they send you by text. Or they will try to get you to load and use remote access software in an effort to commadere and take control of your computer.

I only write reviews when I feel exceptionally impressed, good and bad. ROBINHOOD.COM is BAD.

Do not trade anything on this site unless you eventually want to be scammed.

DO NOT TRADE ANYTHING ON ROBINHOOD.COM

Sandore Cagna

It’s been a week (February 17) since I went to move my bitcoin on Robinhood to my hard wallet. They stopped it with a yellow banner “we are reviewing your case. We’ll notify you by February 24. Learn more” Then I ended up talking to a Chinese sounding girl named Jennifer that asked me a lot of questions and wanted me to send my bank statements, which I sent one. I wasn’t happy with the process but I thought let’s get this over with. Today is the 22nd and I’ll let you know on the 24th what happens. I’m prepared to go on blast with these criminals. Make no mistake about it. Robinhood is a criminal operation. No matter what happens with my case, I can tell you, they seem to have no real support staff. With all the comments I’ve read it’s hard to believe no one has gotten any traction with their thievery. Maybe they are protected Democrats and Merritt Garland won’t prosecute them as a result. I sure would like to know who has been made whole since the original Robinhood embezzlement. Please let me know

Richard Angeney

I would like to request for some help. Against Robin Hood. in November, they started an investigation Of my account Stating it would take seven to 10 days. After 10 days, I asked what’s the deal? They said they needed more time. This started on her about November the 10th. and on Christmas Day they concluded that my account was closed and I could no longer withdraw or trade anything through my account. I have. no idea why they’re closed it. I had bought some bitcoins and I used some of it, but I started with $5500 and $4300 remained in my account. They sold my assets, some of them at a loss. and have held my money since Christmas Day. And I still don’t have it. They say they’ll return it. They made me fill out a check request form and said I would receive something in 2 to three weeks. I need the money now, and I have been making email requests since the day they sold off my stock In January. They ignored my emails for two months and just recently started working with me to get my money back. I want interest on my money and I wanna know if I’m eligible. for compensation since I could have invested that money somewhere else if they weren’t holding it. The Bitcoin has doubled since I bought it in $32,000 a coin. It’s now at $69,000 a coin and the halving is right around the corner. I’m very upset about this, and Robin Hood does not seem concerned at all, they take their time to do anything. And because they’re in control of my money, I have no leverage. I did read their terms of service. And I still can’t find any violations that I made that would warrant them closing my account, except that they say in our sole discretion. answering to nobody, we can close your account. I had no idea their soul discretion was so arbitrary. I also read through and found there’s nothing in there mentioning how long they can take to return my money. I wasn’t looking for that, the first time I read through, I couldn’t imagine somebody keeping somebody else’s money. indefinitely and still be in business. I will tell everybody I know that Robin Hood is nothing but a thief and a liar. And after reading Brian’s story, it just confirms everything that I’ve feared. I would appreciate any help you can offer. Thank you. Richard.

Richard Angeney

I’m having an issue with coin base right now. A friend deposited 51,000 USDT. into my wallet. They told me I had to pay $8000 in gas fee. To retrieve it. After doing so, they told me I had to pay $2000 for. Receivership since it was tethered. I paid that. Then they told me their server went down, and all of my gas money and receivership money was lost. If I would give them more money to reinvest and raise the money to pay me back my gas money and receivership money. They would do so. I didn’t have any money to give, so they told me I go to the end of the line. I. recently contacted somebody at Coinbase on Telegram and they. told me I got scammed. The people I had been working with on Telegram suddenly disappeared off of my contact list, And I can’t find them. Then the person that told me I got scams at for $500 he could buy a software program that would find my money. Sounds like just another scam to me. I didn’t give him any more money. When I go on coin base, I see two deposits, one of 30,000 and one of 21,000. But I can’t access it every time I try to move it somewhere. It says that it has to be on the B and B. network. I have B and B. but I don’t know how to use it. to make this transaction occur If you know how I can get my money out, I would be happy to share it with you. Just a note. The person that deposited the USD T into my account did so without my permission. I have a trustwallet account and I have to receive money into that account. Nobody can just throw money in there. I don’t. Know what coin base doesn’t do the same. I had already paid the gas money on the $30,000 deposit. When she threw the $21,000 in, they told me I had to clear it before they could give me the 30,000. It was all just to scam. Is there a record of Telegram? That can be recovered and traced?

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