Watch out Stage 2
Robinhood removed trading commissions, earning instead from payment for order flow and subscriptions. Massachusetts regulators settled with it in 2024 over confetti, lottery-style rewards and nudges that encouraged frequent trading. One extraction criterion, and accounts transfer out through the standard system, so there is little lock-in. Stage 2.
- Since
- 2013
- Category
- Fintech
- VC-backed
- Yes
- Public
- Since 2021 (NASDAQ: HOOD)
- Website
- robinhood.com
The promise
Its first promise, and how much is kept · Scoring
80% kept
“Stop paying up to $65 for every trade.”
Why it’s rated 2
The criteria it meets, with sources · Method
- Alignment 0 of 3
- None
- Lock-in 0 of 4
- None
- Extraction 1 of 7
-
- E4 Hidden costs and dark patterns Jan 18, 2024
- Decline 0 of 3
- None
Result No extraction that meets the stage 3 test, and either some lock-in or no alignment criterion, so stage 2.
News signals
Sourced reporting, tagged by strategy
Jan 18, 2024
Robinhood pays $7.5 million to settle Massachusetts “gamification” charges
Dark patternsRegulatory risk