“I seriously thought Robinhood was a game,” Justin Hermouf, 24 stated. “I thought all of that money I was losing was fake money. You know, like a video game.”
Justin Hermouf started trading stocks when he was forced to go on lock down earlier this year from the COVID-19 pandemic. “My friend sent me a link to win a free stock if I downloaded some Robinhood app. All I knew about stocks at that time was they were worth money and it was free.”
After getting his free stock, which by happenstance was Hertz Global, Justin was hooked.
“I woke up one morning and my Hertz stock tripled in price. I was up like $15 stock market bucks!”
Justin didn’t realize it at the time, but these $15 bucks he was up was actual money
“I seriously thought this Robinhood app was a game like Angry Birds. I’m not even sure how the app got my parents credit card number. Or how it mortgaged their house to buy bankrupt stocks.”
“I felt like I was on top of the world when my account said I had $250,000 dollars. Every time I logged into the app balloons and fireworks would go off saying how rich I was becoming. It was extremely addicting.”
Then one day the account had a negative $500,000 dollar balance. Justin didn’t know what to do so he deleted the app and threw his phone in the garbage. And then the phone calls started happening.
“My parents started getting phone calls from someone named a ‘Margin Account Representative‘. I was guessing that had to do with my Robinhood app. Right before I lost all of my money I signed up for something called a margin account. Supposedly those kind of accounts enhance your returns.”
His parents had no idea he mortgaged their house
Justin’s parents had no idea their son racked up $500,000 in margin debt. And even worse, they had no idea the Robinhood app mortgaged their once paid off house.
Currently Justin is fighting in a heated court battle with Robinhood. According to Justin, he was unaware the app used real money.
Justin’s lawyers claim that any app that gives away incentives like a ‘free stock’ or says ‘congratulations you have won’ every time a stock goes up in price is conniving and fraudulent.
Robinhood on the other hand argues that anyone who has the sense to upload their parents credit cards or their house should know what they are getting into.
Either way, the result of this court battle will likely dictate how brokerage accounts can market their product to children going forward.