Not upheld: Fraud reimbursement (APP scams) complaint against Robinhood U.K. Ltd

Decision detail

Summary

Ms M fell victim to a market manipulation 'pump and dump' scam after following a Facebook advert to an investment tips group. She purchased shares in company P through Robinhood on 28 July 2025, but the stock price collapsed the next day. Robinhood subsequently closed her account and sold her shares without notice after Ms M initiated a chargeback on her initial deposit. Ms M complained that Robinhood failed to treat her fairly and sought reimbursement of her losses. The ombudsman found that Robinhood's execution only service model meant Ms M bore responsibility for her trades, the firm had no reasonable basis to know of the scam, and its terms and conditions permitted the account closure and asset liquidation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Robinhood's execution only service model meant Ms M bore responsibility for her trades and losses. The firm had no reasonable basis to know of the market manipulation scam and therefore could not be expected to prevent the loss. Robinhood's terms and conditions clearly permitted account closure and asset liquidation, and the firm acted fairly in exercising these rights, particularly as Ms M had not disclosed the scam circumstances when she initiated the chargeback that triggered closure. The Consumer Duty should be interpreted within the context of the execution only service being provided.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website