FTC sees increase in Robinhood complaints as customers claim they can’t leave the app

A U.S. consumer watchdog saw an increase in complaints about Robinhood last week, with some clients claiming they could not liquidate their investments and move to other brokerage firms.

According to the agency, the Federal Trade Commission received more than 100 Robinhood-related reports from January 24 to February 2. The previous week, seven such complaints were filed. Agency data on other businesses were not immediately available.

Last week was chaotic for trading platforms as investors in GameStop, AMC and other high-flying stocks piled up. Robinhood has restricted the trade of as many as 50 names due to volatility and has since lifted the limits.

The move had a backlash from users and lawmakers who accused Robinhood of market manipulation, and the side of the hedge fund managers who shorted the shares. The company said it does not make these decisions based on relationships with market makers, and that it should limit the buying side so that it can meet capital requirements.

Many of the FTC complaints highlight the trade restrictions, but also show great frustration with Robinhood’s customer service. In the past year, users have complained about lack of support when things go wrong, such as account hacks or problems with trading options.

Robinhood said it had tripled its customer service team and hired hundreds of registered financial representatives last year as the company’s user base rose more than 13 million. The company has historically said: ‘it can best serve customers by email’, but in some cases they reach customers by phone call.

“We are committed to improving the support we provide to customers. This is a top priority for us: we are actively taking on and putting this work first,” a Robinhood spokesman told CNBC.

During the GameStop chaos, some Robinhood customers said they could not deposit their bills to go to other trading platforms. One Robinhood user told the FTC that the ability to “hold on to money is still active, but that money or trading stock is completely blocked.”

“You are sending your complaint in vain with little hope that anyone will return to you. I just want the money I earned so I can close my account and finish this service,” said another Robinhood- client written to the agency.

Another customer described a similar case, saying the only way to contact Robinhood’s customer support was via email. They said they “sent emails almost daily and received no response.”

Tim Maloney, co-founder of ETF firm Roundhill Investments, told CNBC his trading was limited and he could not withdraw money from Robinhood. Maloney was also unable to contact Robinhood customer support.

Rayz Rayl, a former teacher and now a professional poker player, said he lost thousands of dollars last week by trading GameStop. He told CNBC that he now has trouble reporting.

“I can not even end up in my account and still have a few thousand dollars that I want to transfer in my bank,” he said in a telephone interview. “I called Robinhood, they do not answer their phone. I have emailed Robinhood many times and get 1-3 business days back – still nothing.”

Robinhood and other brokerage firms use a service called Automated Customer Account Transfer Service, or ACATS. The system facilitates the transfer of one brokerage business automatically. Brokerage firms are required by the regulators to respond to any requests within 24 hours and initiate a transfer.

But the automated system does not support transfers of cryptocurrencies or partial shares – two products that have risen among younger investors. If traders stick to their portfolio, they could run into problems settling their Robinhood accounts, a person familiar with the process told CNBC.

Other users have complained about connectivity issues on social media. Robinhood’s API provider Plaid, which connects users’ bank accounts with programs like Robinhood and Venmo, told CNBC he sees no problems or downtime at their end.

Despite the complaints, some reports show hundreds of thousands of people reported to Robinhood last week. According to JMP Securities, the company downloaded 600,000 downloads on Friday alone. Robinhood’s venture capitalists also told CNBC that downloading new customers outweighed the exhaustion.

Robinhood has published several blog posts in which he has decided to discontinue the buying office trade. In one, Jim Swartwout is president and general manager of Robinhood Securities, outlining the challenges Robinhood has scaled down to meet demand.

“We have grown rapidly. And sometimes we have faced challenges while facing the moment,” said Swartwout, a former CEO of TD Ameritrade.

“We have been rightly criticized for not delivering to our customers. We want our customers to be able to buy the securities they want in the quantities they want, and to get the help they need when they want. We take our responsibility to our customers – and to the regulations and rules that exist to protect them – seriously. ‘