Robinhood Sued By Family of 20-Year-Old Trader Who Committed Suicide (cnbc.com) 192
Robinhood was sued Monday for wrongful death by the family of Alex Kearns, a 20-year-old customer who took his life last summer after believing he had racked up big losses on the millennial-favored stock trading app. CNBC reports: "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," said the complaint filed by his parents Dan and Dorothy Kearns, and his sister Sydney Kearns in a California state court in Santa Clara. The family is based in Naperville, Illinois. Robinhood's "reckless conduct directly and proximately caused the death of one of its victims," the complaint said. The lawsuit is also accusing the brokerage of negligent infliction of emotional distress and unfair business practices.
Alex Kearns, a then-sophomore at the University of Nebraska at Lincoln, committed suicide in June after thinking he had a negative $730,165 cash balance on Robinhood. The complaint alleges that Kearns misunderstood the Robinhood financial statement and was protecting his family from the financial obligation. The suit says that Kearns made three attempts to contact Robinhood customer service regarding the massive underwater balance. However, his messages were met with automated replies, according to the complaint.
In a note to his family that CNBC has seen, Kearns accused Robinhood of allowing him to pile on too much risk. He claimed the puts he bought and the shares sold "should have cancelled out," according to the note. "How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?" read the note Kearns wrote to his family. "There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned." A Robinhood spokesperson told CNBC, "We were devastated by Alex Kearns' death. Since June, we've made improvements to our options offering."
Alex Kearns, a then-sophomore at the University of Nebraska at Lincoln, committed suicide in June after thinking he had a negative $730,165 cash balance on Robinhood. The complaint alleges that Kearns misunderstood the Robinhood financial statement and was protecting his family from the financial obligation. The suit says that Kearns made three attempts to contact Robinhood customer service regarding the massive underwater balance. However, his messages were met with automated replies, according to the complaint.
In a note to his family that CNBC has seen, Kearns accused Robinhood of allowing him to pile on too much risk. He claimed the puts he bought and the shares sold "should have cancelled out," according to the note. "How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?" read the note Kearns wrote to his family. "There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned." A Robinhood spokesperson told CNBC, "We were devastated by Alex Kearns' death. Since June, we've made improvements to our options offering."
A UI Error (Score:5, Interesting)
FTFA:
He didn't. He had a well-hedged position. However, the notice of the margin call arrived on June 11, 2020 (a Thursday). Therefore, the option he sold was executed early (they normally execute automatically Saturday using the closing price on Friday). Maybe it was right at the bubble and they were worried a price move would render the option worthless the next day?
The next day (Friday) he killed himself and the day after that (Saturday, when his other option auto-executed) RH sent him an email saying his account was back in the black.
A few further tragic details. First, although it says he emailed several times, he did so Friday morning starting at 3:47 am when he got the notification he needed to deposit funds, and a twice more into the morning. He got a case number, and it's unreasonable to expect RH customer service to have 10 hour turnaround time when it started at 3:47am. He had a trouble ticket to track and killed himself that same day. Second, he did so to keep the debt from spreading to his family. If he had been better versed in bankruptcy law he would know that his parents weren't responsible (unless they cosigned on his margin account, in which case his death wouldn't make them not responsible.) So it wouldn't accomplish what he expected it to. Three, his suicide note is tragically financially focused and blaming himself. We have bankruptcy so you can ruin your life without needing to end it.
A much better article than what was referenced in the /. post. [cbsnews.com]
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No it is not. It is very obviously reasonable to a normal person to expect immediate customer care service when other people's finances and debt are involved.
Customer care is important. We still live in a society where real people live.
Robinhood's business model is catching young stupid people and entice them into gambling, and sell their behavioral data to predatory hedge funds who want to keep tab on
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Your bank has 24 hour hotlines for everything you want?
My bank has a central 24 hour hotline to lock cards in case of theft. Everything else is relegated to business hours. Anything more complicated than "send me the form by mail" is relegated to the specialists, which may or may not be reachable at the time of calling.
Re: A UI Error (Score:4, Informative)
Yes my bank does have 24x7 customer care service. Furthermore, 3:47 + 10 = is 1 in afternoon. But those are strawman arguments. Even your bank has 24x7 hotline when debt is involved i.e. Credit card. AND your bank doesn't entice you to effectively gamble and then goes quite.
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A few things to consider
1) 3:47am + 10 hours is 1:47....in his local time zone. He was home from college, and it looks like his family is based in Illinois. Robinhood is in CA, so it would be 11:47am.
2) He contacted them via email. Email / secure message support never has quick response, even from major banks. It's usually at least 6 hours before I get an email response from Chase.
3) This happened in June 2020....in the middle of the pandemic. I tried contacting Chase bank in late May, and their usual 24x7
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Re: (Score:3, Interesting)
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It is very obviously reasonable to a normal person to expect immediate customer care service when other people's finances and debt are involved.
No, it isn't. Specifically, it is not reasonable to expect a trading platform which involves activity that occurs between 9am and 4pm to have customer service at 4am. I know you feel entitled to have everything you want immediately, but that is not how the world works.
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The activity that occurred was an email at 3am demanding payment of $170k. I think, if you are only going to provide customer support during office hours, it is reasonable only to send emails that might provoke a need for it during office hours.
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Most apropos sig ever at the bottom of this article:
Every young man should have a hobby: learning how to handle money is the best one. -- Jack Hurley
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and it's unreasonable to expect RH customer service to have 10 hour turnaround time
I can't disagree with this more. Even a 1 hour turnaround time is too long for an app used for day trading. I've contact my trading platform precisely once via email and once via phone, and I had a response within 10min to email, and I got through to a person straight away on the phone.
Re:A UI Error (Score:4, Insightful)
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Day traders used to have to pay 10,000/month for access. RH is not a good day trading app. And this wasn't a day trading play. It was a sophisticated options play that made him money, the problem was the different options legs executed at different times.
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''Even a 1 hour turnaround time is too long for an app used for day trading''
It's been a while since I've read their TOS, but it was apparent to me that [aside from the obvious platform weakness] that they were not a ''day trading'' friendly platform. In the ''dot com'' days, it was the equivalent of using Ameritrade to execute your orders.
This pretty much spells out how unfriendly a platform they are for traders [for the idiots that don't understand the inherent disadvantage you have in executing on the li
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It's almost like these apps shouldn't focus on minors.
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Exercising of option is usually on a saturday, rarely on a week day unless the stock is in a takeover
and Legging in and out of trade is amazingly dangerous, You should always unwind it together
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You are totally right that what he intended to do was buy and sell option spreads and never own a single share of stock. But the sold put is an obligation to buy the shares, and someone made him follow through on that obligation, so he ended up with a ton of shares and debt. He had the right to sell it at a higher price, so he was likely going to make a small profit.
He bought and sold a more complex options arrangement than a put spread, but at the time all this happened all the other options were worthle
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https://us.etrade.com/knowledg... [etrade.com]
But it does seem to be to be horrible service. If you open a put spread (and assuming you opened as a spread) and
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As a comparison (Score:5, Informative)
The trading app I use (Degiro) gives you a 20 question exam before unlocking the ability to simply buy and sell shares. It gives you additional exams for every more advanced function you do. You want to sell shorts: Prove you know what a frigging short is and what risk you take. You want to trade options, prove you know what a frigging option is. In each case some of the questions on the exam are based on risk, leverage and how much money you get to lose.
Oh and a person answers the phone when you call them.
This may be dismissed as a kid being an idiot, however a certain amount of responsibility lies at the hand of a company that provides a service, especially one with poor support and shitty interfaces.
We shouldn't be freely handing out loaded guns and telling people to shoot themselves in the head with them, despite how good it would be to rid the world of stupid people.
Re:As a comparison (Score:4, Insightful)
...We shouldn't be freely handing out loaded guns and telling people to shoot themselves in the head with them, despite how good it would be to rid the world of stupid people.
We also shouldn't be freely making rather insane comparisons either. Loaded gun? You call this an analogy?
Not trying to be cold-hearted about this, but we're not exactly filling headlines daily with suicides related to trading. And from the details I've heard, this young man ended his life rather quickly upon assuming he was suddenly in debt rather than spend perhaps a day researching his position. How did he get into trading? Was there NO other student on campus he could have spoken to that was also using this app? The University of Nebraska, does not teach a single finance course, and therefore, zero professors on campus that could have offered guidance? Had this man realized the debt could never carry over to his parents (his primary concern), he would have likely not ended his life.
Suicide is hard enough to handle within a family, but when the justifications are this weak, it makes it all the more difficult and painful.
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Loaded gun? You call this an analogy?
I mean we could also use the analogy of jumping in front of a train, or off a cliff. The outcome is somewhat the same as in this case.
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Loaded gun? You call this an analogy?
I mean we could also use the analogy of jumping in front of a train, or off a cliff. The outcome is somewhat the same as in this case.
Uh, we're talking about trading apps here. Again, not trying to be cruel, but handing the Robinhood app to 99.999% of the population, does not end in this kind of outcome. Bad analogies, are bad.
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Loaded gun? You call this an analogy?
I mean we could also use the analogy of jumping in front of a train, or off a cliff. The outcome is somewhat the same as in this case.
OK, let's go with the analogy of jumping off a cliff. Instead of a trading app he didn't understand, this person was walking alongside a cliff, admiring the view whilst drinking purified organic water from a reusable bottle. He accidentally drops the bottle, which rolls across the road behind him. The traffic prevents him from running after it. Looking back out at the magnificent view from the cliff, he realizes that his littering has ruined the environment and his parents are going to live in a hellish po
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''This may be dismissed as a kid being an idiot, however a certain amount of responsibility lies at the hand of a company that provides a service''
I've said this before, using a quote system from the broker you trade with other than to assure they reconcile correctly is insane. Getting your quotes on WIFI, and expecting to know the current market is even more insane.
The fact of the matter is it costs a shit-tone of money for timely quotes and millisecond differences make brokerages billions of dollars.
Besid
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Someone who was already unpredictably disturbed, that's who. A reasonable person could expect that behavior. Hell, even if he had owed that much, a reasonable person would have first determined if their family faced liability (he was just guessing, not b
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Basically, in order to protect rational adults from the consequences of taking risks, upward social mobility is restricted. The already wealthy have access to tools to increase and maintain their wealth, everyone is denied them "for their own protection".
Just remember the old adage (Score:5, Insightful)
When you owe the bank five thousand dollars, you have a problem. When you owe the bank five million dollars, the bank has a problem.
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my girlfriend is using something similar (Score:2)
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Selfown, she's your girlfriend, stupid.
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How is that a selfown? Maybe she has tits the size of watermelons and is a cracker in bed. Not everyone is attracted to intellect.
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What it really comes down to is you can't save people from their own stupidity.
Sure you can. My trading app gave me an exam before enabling my account. There were 3 questions on dividends on the exam. The app would have told her she's stupid (at least in a trading sense).
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I believe it's law in Europe that they have to test that you have a hum about what you're doing. A quick check gives me 16 different quizzes on one of the platforms I use, each unlocking a function.
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I wonder if you realize how big of a problem YOU have here.
Unless when she loses "all of her money" it's going to be $800 or something. $800 to learn a lesson is something that happens to most of us.
Girlfriends turn into wives, and joint accounts.
You really don't want reckless wife who "is stupid but doesn't know it."
Proceed with great caution, my friend, and maybe seek the advice of some wise and trusted friends. Maybe someone who has already lived through the college years and learned the lessons you two
Your girlfriend wasn't similar (Score:2)
The guy who killed himself set up a well-hedged position that turned a profit. He knew exactly what he was doing. The email from RH spooked him into thinking he had lost all that money, but he had tracked his options and was not only fully-hedged but profitable.
Please explain to your girlfriend why fluoride is important. Losing all your money in your early 20s is recoverable. Permanently damaging your teeth is less so.
Due diligence (Score:2)
RH did not do due diligence, and should, by justice, pay a huge amount to the family, even if legally they are not guilty or responsible.
This needs to be fixed at the legal level.
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It would be good if companies are forced to do due diligence on their customers when allowing them to take risk.
Oh, you mean like NINJA loans from banks shoring up bullshit CDOs perpetuating an entire economic collapse, followed by handing an entire nation full of 18-year old kids $80K+ of debt for "higher" education, funding utterly worthless degrees?
Oh yeah. Our society just screams responsibility.
RH did not do due diligence, and should, by justice, pay a huge amount to the family, even if legally they are not guilty or responsible. This needs to be fixed at the legal level.
Yes. everywhere. Won't ever happen. It's a Greed thing.
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It would be good if companies are forced to do due diligence on their customers when allowing them to take risk.
RH did not do due diligence, and should, by justice, pay a huge amount to the family, even if legally they are not guilty or responsible.
This needs to be fixed at the legal level.
I have 16 different test to unlock functions. I believe it's mandated as part of the mifid eu law.
Customer support should be mandatory (Score:2)
Any of these apps should have required customer service phone numbers that are staffed at least during business hours in every country they operate in. If you can't afford to run a support line in a country then you can't afford to sell an app there either.
This whole idea of moving fast and breaking things has far too high of a cost. Robinhood has been involved with many problems at this point related to lack of customer support. Their entire business model seems to revolve around not having to support what
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Any of these apps should have required customer service phone numbers that are staffed at least during business hours in every country they operate in.
He contacted them at 3:45 in the morning. That is outside of both trading and business hours. He had, in fact, received a case number from customer service. It takes time to investigate a case. He killed himself before they could get the investigation completed.
Sigh (Score:5, Interesting)
Someone at age 20 is financially independent, and able to sign legally-binding agreements. If they had one inkling of what they were actually doing, they'd have understood and/or queried and waited for the reply. If it was worrying, they could have confided in someone. Anyone. A friend, a neighbour, a stranger, citizen's advice agencies, anyone at all. Because their advice would have been to wait to hear back and/or talk to someone who knows about such things.
There's a point at which grown adults have to take responsibility for their own actions, rather than rely on an app to babysit them. And though I am a massive supporter of consumer law, the underdog, and fighting injustices, the app here has done nothing wrong. The guy couldn't even wait until Monday morning to try to get hold of someone. He was obviously in an extremely fragile state of mind anyway.
I've had a few oh-shit moments in my life, you just have to hold on to see what happens. Sure, if you end up bankrupt, that's not a good outcome for anyone involved, but it takes months if not years to get that far. Fact is, if you were worried about that you don't invest in ways where your money is at risk, or where the risk is strictly limited to your investment and maybe a small amount of fees on top.
I feel sorry for the family, but the guy gambled his life savings away in a way that made him genuinely believe he'd be ruined for life, far beyond the cost of his investment, and then decided to take his life within a day or so of finding that out. There's no avenue there, there's no chance for help, there's nothing you can reasonably do to stop that, or a similar repeat with a similarly-minded person. And he *HAD* literally gambled his money in a way that he *could* have lost absolutely everything, and in a way that he could easily believe that he had lost everything.
Even facing ruin, a person of sound mind would just wait until Monday morning, maybe even spend the next week phoning around the company, a financial advisor even, family, friends, even consulting people on the Internet to see if you're interpreting it correctly. They didn't, because they weren't of sound mind in the first place.
And a person not of sound mind, investing life savings in a way that can turn into a liability way beyond those life savings, at age 20, who then kills themselves within 48 hours without seeking help isn't somebody that we *can* help without that opportunity to do so.
And that opportunity shouldn't come from a faceless app and a boilerplate email about how they could seek help if they were facing financial difficulty, or any such nonsense like that.
I'd love to hate on Robinhood here, given what they've done recently to manipulate markets and protect their investors at the expense of everyone else, but expecting an app to somehow save a person in such a position is really quite inhumane when they must have been surrounded by real people that they didn't feel they could go to for help..
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THIS!
Personal responsibility (and common sense) are dead in America it appears
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That was an attempt at personal responsibility on his part.
He understood that he had fucked up, didn't want his family to have to deal with the fallback, and so he committed suicide thinking that this would somehow prevent his family from being affected. You can't get more personal responsibility than killing yourself to make sure your problems don't become somebody else's problems.
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The story has a lot of folks blaming RobinHood....
Re:Sigh (Score:5, Informative)
That was an attempt at personal responsibility on his part.
....
You can't get more personal responsibility than killing yourself to make sure your problems don't become somebody else's problems.
No. It was an attempt to run away from the problem instead of facing the consequences. Personal responsibility would have been actually taking the time to learn about what he was doing, the products he was buying, understanding the situation he was in, and then acting. Instead, he didn't learn about what he was doing, bought things he didn't understand, didn't wait for RH customer service to see what his situation is, and didn't talk to a lawyer. No, he shot himself and now his family wants to blame someone else rather than him and themselves for the way they raised him.
Re:Sigh (Score:5, Insightful)
You can't get more personal responsibility than killing yourself to make sure your problems don't become somebody else's problems.
Selfish people assume their suicide, doesn't become someone else's problems, especially within their own family where he was loved. Money, was not the only thing lost here.
God forbid we hear of any of his other friends or family members following suit because of his actions.
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''Even facing ruin, a person of sound mind would just wait until Monday morning,''
And would have consumed copious amounts of adult beverages, so that on Monday morning they would have the hangover of the century. The adult way to face the music.
On this basis alone I hope they win (Score:4, Insightful)
We desperately need the courts to rule that companies cannot hide behind "the computer" on anything from customer service to content moderation decisions that deactivate accounts. Whatever the company puts out to deal with its users should be treated as fungible with a human actor making the decision in the sense of legal agency.
Blah blah blah says the dumbass libertarian (Score:2)
You don't need any new regulations, smart guy. You need a simple rule saying that algorithms' conduct is the liability of their creator just like the actions of a human with legal agency acting on behalf of a company are the liability of the company.
But maybe we
I don't see any wrongdoing here (Score:2)
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RH messed up by telling him he owed a ridiculous amount of money when in fact he owed nothing.
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RH messed up by telling him he owed a ridiculous amount of money when in fact he owed nothing.
They told him he owed a ridiculous amount of money? I thought the point was that they told him his position had an unrealized negative amount and he made wild assumptions from there regarding owing anything.
Suicide was an over-reaction (Score:2)
Sure, RH did a bad job at informing him about the actual status, but that is not enough to trigger a suicide in a stable adult. I do understand that his loved ones are upset and seek somebody to blame, but the blame on RH is misplaced.
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I don't see how RH could be hel
Society has officially jumped the shark... (Score:2)
I feel bad for the guy and his family but how is an app on his phone responsible for this? Did he not download it of his own free will? The stocks he chose to trade in were his choice. Educating himself on how calls and puts and shorts work is his responsibility - not the app.
Traditionally people took responsibility for their own actions but this seems to now be a thing of the past. Now it seems that every misfortune has someone to blame and that someone is never the victim.
His own decision (Score:2)
The obvious advice for anyone in the situation would be: Wait until (1) you can think clearly, (2) the situation is clear beyond any doubt, and (3) you talked about it with a sensible person. (1) would have told him that you can live even with $700,000 debt, because whoeve
Millennial is a slur. (Score:2)
Fucking boomer scum.
Re:Not Robinhood's fault... (Score:5, Insightful)
That's not the issue.
The issue is that he was spending money he had, but the trading platform, through its app, told him otherwise.
The world is full of people with no knowledge of various things. It's also full of people who can easily be lured into doing various things to the point they're addicted. Does that mean they're fair game for predatory approaches of various companies?
With that being said, TFS (and TFA) say he attempted to contact Robinhood three times, and was unsuccessful (automated replies). Think about it.
Re:Not Robinhood's fault... (Score:5, Insightful)
With that being said, TFS (and TFA) say he attempted to contact Robinhood three times, and was unsuccessful (automated replies). Think about it.
This seems to be the standard for the gig economy. Have you tried reaching a real person on Amazon in the last 12-18 months? These companies seem to operate under the principle that if they make it hard enough to actually reach a person to discuss your issue, almost everyone will give up trying.
Re: Not Robinhood's fault... (Score:5, Informative)
Actually I did reach Amazon, just about 3 weeks ago. There's a chat button and a call-me-back button, and call back they did, withing 2 minutes or so.
Then again this is Europe, so maybe here they behave?...
Re: Not Robinhood's fault... (Score:5, Funny)
Was her name Alexa?
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No, it was something Czech or some other former-eastern-block, slavic name. And accent.
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''Was her name Alexa?''
Nope normally stateside, it's Rajesh or some other Asian name. I never talk to them, I use the chat. 24/7 they are available and even when I'm pissed over stupid shit, product errors etc.. they deal with consumers with the attitude that their job is to make the consumer smile. In more than 20 years since my first order, I've never not had an issue solved that didn't make me smile.
Not too many places you can say that about..
Re: Not Robinhood's fault... (Score:5, Informative)
Re: Not Robinhood's fault... (Score:2)
I had the same experience but they have made it difficult recently.
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I'm no fan of Amazon (for different reasons), but I don't think they make it difficult on purpose. Maybe the call center drone you were talking to was an idiot?
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Nope, not a Europe thing at all. I used the exact same feature (call me back) last month here in the Midwest U.S., and it was for a gift return request the site would not let me process online due to a special circumstance of the product. It sounded like the person on the other end might have been Indian, but they certainly assisted me.
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I have to say that over 20 years dealing almost exclusively online, for buying, selling and having done the majority of my ordinary shopping online for the vast majority of that time, Amazon has some of the best customer service that I've ever experienced - telephone, email and online. I was so happy when they started doing proper business accounts, so I could use them for work as well.
Sure, they're screwing over the little people and by far they're not perfect but the one bit that's always worked flawless
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Amazon has some of the best customer service that I've ever experienced
Well, it's a bit of a mixed package. Usually they have (most of) it sorted out, so it works.
What doesn't work particularly well is warranty. Anything beyond 30 days, where you can just return it, and it's a hassle -- they send you to the manufacturer, which may or may not be in your jurisdiction or within your legal reach. (In Europe, where you have law mandated warranty, being sent to the manufacturer is sometimes a downgrade.)
Also getting proper invoices (if you're doing business) is also more difficult.
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No,
that's common for me, they give me good service, I might have to wait 15 minutes for a live person, and that's fine.
I have packages stolen almost 2 times a year, and sometimes I have order problems. Never an issue to get someone on the phone
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if they make it hard enough to actually reach a person to discuss your issue, almost everyone will give up trying.
If you are in the business of serving millions of customers and making a few bucks from each one, there is no way you can have open phone lines. You will be flooded with inane questions from lonely people who have nothing better to do than call and chat.
Maybe Robinhood could have done some things differently, but it really isn't their fault that this guy Darwined himself.
Re: Not Robinhood's fault... (Score:2)
If you are in the business of serving millions of customers and making a few bucks from each one, there is no way you can have open phone lines.
There is: charge the calls. Make it so that any call will cost a minimum of $10, plus $1 per minute, waived in case the issue isn't solvable by following online instructions. Presto, now your call center pays itself, calls are few, and you have a way to detect problems your online tools aren't dealing with effectivel.
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Sure, encourage companies to provide shitty and confusing service so they can make more money by having people call.
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Re:Not Robinhood's fault... (Score:4, Insightful)
With that being said, TFS (and TFA) say he attempted to contact Robinhood three times, and was unsuccessful (automated replies). Think about it.
He was also primarily concerned with saddling his parents with the debt. That was clear. He was a sophomore attending college (i.e. not a complete moron.)
He attempted to contact support starting at 3:47AM. Common sense says you're likely not going to reach someone at that hour. Had this college-educated student who's no stranger to research or the internet thought to do 30 minutes of financial law research to understand the concept of limited liability, we would likely not be here discussing his suicide.
Sadly, think about it, is exactly what a college student should have done.
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My point is that I can see him not thinking clearly when under such isolated, crushing pressure.
Re:Not Robinhood's fault... (Score:4, Insightful)
Then count yourself lucky - but don't look down on this guy just because he had a different reaction to enormous stress.
I'm not necessarily saying that Robinhood is at fault here - but that doesn't mean that what happened to this kid isn't a tragedy.
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He was a sophomore attending college (i.e. not a complete moron.)
You must have went to different colleges than I did.
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''He was also primarily concerned with saddling his parents with the debt. That was clear. He was a sophomore attending college (i.e. not a complete moron.)''
Unless Mom and Dad were guarantors on the account, how would any intelligent person assume that their parents would be responsable for debt obtained by other than a minor? That sounds like a moronic assumption. And being an undergrad assures he's got more intelligence than someone that can't figure out the round peg doesn't go into the square hole, but
Re:Not Robinhood's fault... (Score:4, Insightful)
Re:Not Robinhood's fault... (Score:4, Insightful)
Let's sum this up:
He didn't understand the products he had.
He didn't understand what he was doing
He borrowed money to do what he was doing
He didn't give RobinHood a chance to investigate his situation
He didn't understand the law
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He didn't understand the products he had.
He didn't understand what he was doing
He borrowed money to do what he was doing
He didn't give RobinHood a chance to investigate his situation
He didn't understand the law
And last but not least, he didn't ask for help from someone to explain any of that to him.
I haven't followed the incident particularly closely, but I'm confident he didn't even post on WallStreetBets, or it would have been plastered all over the headlines. He might have actually gotten some reasonable advice if he had.
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That's not the issue. The issue is that he was spending money he had, but the trading platform, through its app, told him otherwise.
The world is full of people with no knowledge of various things. It's also full of people who can easily be lured into doing various things to the point they're addicted. Does that mean they're fair game for predatory approaches of various companies?
With that being said, TFS (and TFA) say he attempted to contact Robinhood three times, and was unsuccessful (automated replies). Think about it.
I've given some thought about it, and the idea is that somehow Robin Hood is running a con man game, a grift. And that's the only way that they can make it stick.
"The kid threw himself in front of a train over nothing, because a tech company can't figure out they shouldn't show a negative $730,000 cash balance to a 20-year-old kid," Bill Brewster, a relative of Kearns, told CNN Business. "How much are these guys thinking about the fire they are playing with?"
The world is full of people with no knowledge of various things.
Okay - let's say that all investment companies
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"let's say that all investment companies are 100 percent liable for all of their customers well being and lives.", "Perhaps the only solution is to make any and all app based investment programs illegal"
Why do you have to go all the way there? Why can't there be anything in-between 100% liable and 0% liable? Why is it that either apps should be able to do ANYTHING they want or be completely illegal? Why is this the way we argue these days?
Can we not say that a majority of the blame lies with the kid for
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''full of people who can easily be lured into doing various things to the point they're addicted.''
I agree. It's deeper than just Robinhood, but they make good use of it. This pretty much spells it out.
Irresistible : The Rise of Addictive Technology and the Business of Keeping Us Hooked http://adamalterauthor.com/irr... [adamalterauthor.com]
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This is a private court case to ask for financial redress - exactly the opposite of the nanny state. In a 'nanny state' the actions leading to his death would have been forbidden by legislation from the Government.
I'm also not really sure that no-fee stock trading could be classified as a 'bold innovation'.
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That's the thing that confuses me. Reporting seems to indicate he was using put options. From my limited understanding, he could not have left himself owing Robinhood hundreds of thousands of dollars. That not how a put option appears to work, assuming he simply lets it expire if the price goes in the wrong direction. My understanding is that he'd lose his premium and nothing more. Unless he was doing something more esoteric, how did he even think he was $700k in the hole?
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He sold a put option and bought a put option at a different price. Think he bought a put at $745, and then to make that option cheaper sold a put at $730. It limits his upside (now he'll have to buy the shares to execute his put at $730 or higher) but also limits his downside because he got the money for selling that $730 put no matter what. Normally, they both execute without any involvement at the same day and he pockets the cash difference of $15 or they expire worthless. Here, he was told he had to
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With crypto it's different as you can never go into minus
Sure you can, there are multiple platforms that allow a person to short crypto. There were shorts yesterday who were just fine, then Tesla's SEC filing hit and they were margin called within a few seconds.
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However the golden rule is to never invest more than you can afford to lose.
That's not a good rule either, because if you don't invest it, then it will get eaten by inflation.
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''With crypto it's different as you can never go into minus.''
I guess, but why would anyone trade crypto from a place that you can't transfer to your wallet? It's risky enough leaving your crypto at an exchanges address and whereas you can't go negative, just ask people that left their crypto in Mt. Gox or countless others how it worked out for them.
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He had a put spread (more complex arrangement than that, but all the other options were out of the money.) He was short a put at X and long a put at X+Y. Both were in the money. He should have had Y00 dollars. Yay! However, the put he was short executed early, and he got margin called because he had to buy the damn stock. He thinks he fucked up, but in reality, he's still fine. His long put executes automatically on Saturday and he made money. Unfortunately, he had already taken his life.