*The Robinhood app is being sued by the parents of a 20-year-old who died by suicide last year after believing he owed the company $730,000.
Alex Kearns died by suicide in June 2020 after reportedly discovering he had a negative balance of $730,000 on the app, which his parents said led him to falsely believe he was in massive debt as the result of some risky trades. They have since filed a wrongful death lawsuit against the company.
According to the lawsuit, Alex was sent an email demanding immediate payment of more than $170,000, but when he attempted to reach customer service to get to the bottom of the issue he was unsuccessful, PEOPLE reports.
“I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold. Could someone please look into this?” he wrote in one of several emails to Robinhood. According to the suit, the only response he received was from an automated email saying the support team would get back to him “as soon as possible, but that our response time to you may be delayed.”
Robinhood finally returned his email — a day after Alex killed himself, and as it turned out, he didn’t owe any money.
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A follow up automated message said: “Great news! We’re reaching out to confirm that you’ve met your margin call and we’ve lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We’re happy to help!”
“He thought he blew up his life. He thought he screwed up beyond repair,” Dan Kearns, Alex’s dad, said in an interview with CBS News reported.
“I can’t tell you how incredibly painful it is,” said Alex’s mother, Dorothy Kearns. “It’s the kind of pain that I don’t think should be humanly possible for a parent to overcome.”
Alex’s parents filed a wrongful death suit on Monday, seeking accountability from Robinhood, according to the report.
The complaint accuses Robinhood of using “aggressive tactics and strategy to lure inexperienced and unsophisticated investors,” like their son Alex, who was provided with “almost no investment guidance, and its customer ‘service’ was virtually non-existent, consisting of automated email replies devoid of any human contact or interaction,” the complaint says.
“Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money,” the complaint says. “He held options in his account that more than covered his obligation, and the massive negative balance would have been erased by the exercise and settlement of the puts he held.”
A spokesperson for the company gave a statement to TMZ.
“We were devastated by Alex Kearns’ death,” that spokesperson said. “Since June, we’ve made improvements to our options offering. These include adding the ability to exercise contracts in the app, guidance to help customers through early assignment, updates to how we display buying power, more educational materials on options, and new financial criteria and revised experience requirements for new customers seeking to trade Level 3 options.”
“In early December, we also added live voice support for customers with an open options position or recent expiration, and plan to expand to other use cases,” the statement said. “We also changed our protocol to escalate customers who email us for help with exercise and early assignment. We remain committed to making Robinhood a place to learn and invest responsibly.”
A spokesperson told CBS News, “Our mission is to democratize finance for all. We designed Robinhood to be mobile-first and intuitive, with the goal of making investing feel more familiar and less daunting for an entire generation of people previously cut out of the financial system.”
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