FTC sees an increase in Robinhood complaints as customers claim they cannot leave the app

Last week, a U.S. consumer watchdog saw an increase in complaints about Robinhood, and some customers claimed they were unable to settle stakes and move to other brokerage firms.

The Federal Trade Commission received more than 100 Robinhood-related reports from Jan. 24 to Feb. 2, according to the agency. The previous week he filed seven such complaints. Agency data on other companies were not immediately available.

Last week was chaotic for trading platforms as investors piled on GameStop, AMC and other high-flying stocks. Robinhood restricted trading to up to 50 names due to volatility, and has since raised those limits.

The move saw reaction from users and lawmakers who accused Robinhood of manipulating the market and siding with hedge fund managers who reduced shares. The start-up said it was not making these decisions based on relationships with market makers and needed to limit the purchase in order to meet capital requirements.

Many of the FTC’s complaints highlight these trade limits, but they also show widespread frustration with Robinhood’s customer service. Over the past year, users have complained about the lack of support when things go wrong, such as account piracy or problems with trading options.

Robinhood said it tripled its customer service team and hired hundreds of registered financial representatives last year, as the company’s user base topped 13 million. The start-up has historically said it “can better serve customers by email,” but in some cases it reaches customers through phone calls.

“We are committed to improving the support we provide to customers. This is one of our priorities: we actively hire and prioritize this work,” a Robinhood spokesman told CNBC.

During the chaos of GameStop, some Robinhood customers said they could not charge their accounts to switch to other trading platforms. A Robinhood user told the FTC that the ability to “continue to deposit money is still active, but withdrawing money or trading shares is completely blocked.”

“Send your complaint into the void with little hope that anyone can answer you. I just want the money I earned to be able to close my account and end this service,” another Robinhood client wrote to the agency.

Another customer described a similar problem and said the only way to contact Robinhood customer service is via email. They said they “sent numerous emails (almost daily) and received no response.”

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

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

“I can’t even get into my account and I still have a few thousand dollars I would like to transfer to my bank,” he said in a phone interview. “I called Robinhood so they wouldn’t answer his phone, I sent an email to Robinhood many times and I got an email telling me between 1 and 3 business days, still nothing.”

Robinhood and other brokerage firms use a service called Automatic Client Account Transfer Service (ACATS). The system facilitates the automatic transfer from one brokerage firm to another. Brokerage agencies are required by regulators to respond to any request and initiate a transfer within 24 hours.

But this automated system does not support cryptocurrency transfers or split shares, two products that have aroused among younger investors. If traders hold any of their portfolios, they may have trouble liquidating their Robinhood accounts, a person familiar with the process told CNBC.

Other users complained about social media connectivity issues. Robinhood’s API provider Plaid, which connects users ’bank accounts with apps like Robinhood and Venmo, told CNBC it saw no issues or downtime at the end.

Despite the complaints, some reports show hundreds of thousands of people signing up for Robinhood last week. According to an estimate by JMP Securities, the company recorded 600,000 downloads on Friday alone. Robinhood venture capital investors also told CNBC that new customer discharges far outweighed the wear and tear.

Robinhood has posted several blog posts explaining its decision to close the buy-in trade. In one, Jim Swartwout, president and chief operating officer of Robinhood Securities, describes the challenges Robinhood has had at its disposal to meet demand.

“We’ve grown quickly. And sometimes we’ve found challenges as we’ve been climbing to meet that moment,” said Swartwout, a former TD Ameritrade executive.

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