The family of a Naperville man who died by suicide in June 2020 is suing investment app Robinhood.
According to the lawsuit, 20-year-old Alex Kearns believed he was $730,000 in debt with the app, but his family said it was a tragic misunderstanding caused by the app’s interface.
Wrongful Death Suit Against Robinhood
The wrongful death suit was filed Monday by his parents Dan and Dorothy Kearns, and his sister Sydney Kearns in state court in Santa Clara County, California. The complaint says, “This case centers on Robinhood’s aggressive tactics and strategy to lure inexperienced and unsophisticated investors, including Alex, to take big risks with the lure of tantalizing profits.”
Kearns account on the app last June showed a negative balance of over $730,000, according to the complaint. CBS News reports that Robinhood sent him an email requiring that he take immediate action, asking for a payment of over $170,000.
Kearns reached out to the company via email asking them to look into the matter. The lawsuit says the company sent automated replies to the three messages he sent, saying response time to messages might be delayed.
No Money Owed
The company returned Kearns’ email the day after he died. According to CBS News, the message read, “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!”
As it turned out, Kearns did not actually owe any money.
Kearns family says Alex left them a note, asking ““How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?”
In an interview with NCTV17 last June, Kearns’ cousin-in-law Bill Brewster said, ““He was trying to save his family from the debt he thought he racked up and he didn’t even incur it. It gets no more tragic.”
Suit Claims Lack of Guidance
The complaint alleges that Robinhood gave Kearns ‘”almost no investment guidance, and its customer ‘service’ was virtually non-existent, consisting of automated email replies devoid of any human contact or interaction.”
According to NBC News, the lawsuit does not specify damages.
Robinhood Response
In a statement to Business Insider, a spokesperson for Robinhood said, “We were devastated by Alex Kearns’ death.”
They added that since his death they have made improvements to the app, such as guiding customers through early assignments and updating power buying displays.
“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. 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,” the spokesperson said.
