BY: NATALIA PATTERSON
The “Robinhood” app allows people to invest in and trade stocks without charging any fees for doing so. It is named after the famous character Robin Hood, who, in the stories about him, stole from the rich and gave to the poor. Robinhood is based on a similar idea: Its mission statement is to “democratize finance,” allowing not only rich stockbrokers but also inexperienced investors to buy and sell stocks. Does it really embody these principles?
The features of the Robinhood app are very simple to use: The app makes trading stocks easier than other apps do, making the process game-like. However, this simplicity makes it seem to young investors that buying stocks is easy and effortless. This is not the case, as there is a lot of risk that goes into investing. This is why, in some situations, Robinhood’s simplicity may be a problem.
An example of this is what happened to a 20-year-old college student named Alex Kearns, who committed suicide because the app displayed that he had lost over $700,000. According to CBS News, although Kearns’s parents knew he was trading stocks, they were unaware that Robinhood qualified their son to buy options, which involve a lot more risk and the potential to lose a lot more money. Kearns’s parents attributed the loss of money to their son’s inexperience, and think that the video game-like structure of the app caused him to invest irresponsibly, which led to his death.
In addition, on January 28th, Robinhood restricted its users from buying or trading stocks from several companies, including GameStop, AMC, and Nokia, and only allowed them to sell these stocks. This limited what stocks people could invest in. For this reason, many users of Robinhood wanted to switch to a different app, but found it hard. In an interview with Bloomberg News, Mark Cullen said, “I’d like to get rid of Robinhood based upon principles, but it’s hard to find another one that’s remotely close to it in terms of ease of use and convenience.” This is another example of how Robinhood’s simplicity is used as a marketing tool to make a profit and not for the good of its customers.
In each of these instances, Robinhood did not act in the interest of its customers. Instead, the app uses its accessibility to lure people into using it. Based on this, we can conclude that, despite its name, the Robinhood app does not really give back to the poor.