FTC sees the number of complaints about Robinhood increasing as customers claim they cannot leave the app

A US consumer watchdog last week saw an increase in complaints about Robinhood, with some clients claiming they were unable to liquidate their holdings and move to other brokerage firms.

According to the agency, the Federal Trade Commission received more than 100 Robinhood-related reports between January 24 and February 2. The week before, seven such complaints resulted. Data from the Agency on other companies was not immediately available.

Last week was chaotic for trading platforms as investors piled into GameStop, AMC and other high-flying stocks. Robinhood restricted trading with as many as 50 names due to volatility and has since lifted those limits.

The move saw backlash from users and lawmakers who accused Robinhood of market manipulation, and sided with hedge fund managers who shorted those stocks. The start-up said it was not making those decisions based on relationships with market makers and that it had to limit the buy side to meet capital requirements.

Many of the FTC complaints highlight those trading limits, but also show widespread frustration with Robinhood’s customer service. Over the past year, users have complained about a lack of support when things go wrong, such as account hacks or trading options issues.

Robinhood said it tripled its customer support team and hired hundreds of registered financial representatives last year, as the company’s user base grew to past 13 million. The start-up has historically said, “It is best to serve customers via email,” but does reach customer contact by phone in some cases.

“We are committed to improving the support we provide to customers. This is a top priority for us – we are actively hiring and prioritizing this work,” a Robinhood spokesperson told CNBC.

During the GameStop chaos, some Robinhood clients said they couldn’t cash their accounts to move to other trading platforms. A Robinhood user told the FTC that the ability to “continue to deposit funds is still active, but withdrawals or stock trading is completely blocked.”

“You send your complaint into the void with little hope that someone will get back to you. I just want the money I’ve made so I can close my account and be done with this service,” another Robinhood client wrote to the agency .

Another customer described a similar issue and said the only way to contact Robinhood customer service is via email. They said they “sent numerous emails (almost daily) and received no response”.

Tim Maloney, co-founder of ETF firm Roundhill Investments, told CNBC his trades were limited and he couldn’t withdraw money from Robinhood. Maloney was also unable to contact Robinhood customer service.

Rayz Rayl, a former teacher and now a professional poker player, said he lost thousands of dollars trading GameStop last week. He told CNBC he is now having trouble logging in.

“I can’t even get into my account and still have maybe a few thousand dollars that I would like to transfer to my bank,” he said in a telephone interview. “I’ve called Robinhood, they don’t answer their phone, I’ve emailed Robinhood many times and get an email from 1-3 business days – still nothing.”

Robinhood and other brokerage firms use a service called Automated Customer Account Transfer Service or ACATS. The system automatically facilitates the transfer from one brokerage firm to another. Brokerage firms are required by regulators to respond to requests and initiate a transfer within 24 hours.

But that automated system doesn’t support cryptocurrency transfers or fractional shares – two products that have boomed among younger investors. If traders have either in their portfolios, they may run into problems liquidating their Robinhood accounts, a person familiar with the process told CNBC.

Other users complained about connection problems on social media. Robinhood’s API provider Plaid, which connects users’ bank accounts to apps like Robinhood and Venmo, told CNBC it didn’t see any issues or downtime on their end.

Despite the complaints, some reports show that hundreds of thousands of people signed up for Robinhood last week. JMP Securities estimated that the company saw 600,000 downloads on Friday alone. Robinhood’s venture capital investors also told CNBC that the number of downloads from new clients far outpaced the attrition.

Robinhood has published multiple blog posts explaining her decision to end buy-side trading. In one, Jim Swartwout, President and COO of Robinhood Securities, outlines the challenges Robinhood has had to meet demand.

“We have grown rapidly. And we have encountered challenges at times when we were scaled at this point,” said Swartwout, a former director of TD Ameritrade.

“We have been rightly criticized for failing to deliver to our customers. We want our customers to buy the securities they want in the quantities they want, and get the help they need whenever they want. We take responsibility. to our customers – and to the regulations and rules that exist to protect them – seriously. “