[WSBAPT] Robinhood account drained by fraudulent activity

[Katie Smith Patel]

I had never heard of Robinhood, but I previously worked in fraud/financial crimes at a large financial institution that held retirement accounts with substantial balances.  Fraud is sometimes the fault of the institution and sometimes the fault of the account owner.  I do not have the necessary facts to determine which it is in your case, but we often encountered situations in which account owners fell prey to phishing scams or otherwise voluntarily gave a third party enough personal details to authenticate over the phone and withdraw funds.  If investigation of the telephone recordings and other records warranted suspicion and showed a bad decision on the part of our employees to improperly release funds, we ate big losses to restore funds.  Your friend will need to try to figure out how this happened, including demanding Robinhood release information on how they authenticated the request for withdrawal.  If there is still a balance there, she should obviously take steps to protect that from further theft.  If her personal information is out in the world, this puts accounts elsewhere at risk also.  I am not a litigation expert, but if nothing indicates there was fault on your friend’s side and escalation of the matter demanding internal review and investigation fails to resolve it, I think she could have a case involving negligence or breach of contract.

As general guidance to avoid becoming a fraud victim, including protecting this friend’s other accounts, I have 2 basic suggestions:


  1.  Make sure you set up an online account login for every financial account!  This is based on my experience in the fraud world.  Some of our older customers did not really do computers or email but the problem is, if the account owner does not set up online access, that door to the account remains open for some fraudster who just has enough pieces of personal information to authenticate and set up online access, and then those funds will be gone.
  2.  Set up multi-factor authentication for everything.  Having your phone that is always with you be the only way to access money is going to be a huge help avoiding fraud.

Of course there is more, like having current anti-virus running to ensure malware is not creating vulnerabilities.  But the above 2 items are a must.  At the time I left employment in financial crimes, the company I worked for was bleeding funds over issue #1 above at an unsustainable pace, erring on the side of creating customer confidence.  I would not be surprised if financial institutions have had to throttle back on restoring balances given how great the losses were and the rise in fraud.

I hope for a positive resolution for your friend.

Katie Patel
Paraclete Estate Planning, LLC
(541) 499-9085 (direct)
112 Genessee Street
Medford, OR 97504



From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Brent Williams-Ruth
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Subject: [WSBAPT] Robinhood account drained by fraudulent activity

Greetings All (and apologies for duplicate posting) -

I have a personal friend that just contacted me as she has been the victim of fraudulent withdrawal from her Robinhood Account.  When she contacted Robinhood, they told her they are not responsible for restoring funds.

Does anyone have any experience with this type of loss and recourse? I do not even know where to begin to help her. Appreciate support. I am actually out of the office but I am still working remotely and checking emails if you are to write and get my Out of Office notice.

Thank you!
Brent

Brent Williams-Ruth (pronouns: he/him)
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