Yesterday was not a good day for Robinhood. Their customers were upset after Robinhood halted trading of popular stocks, driving the price down, benefiting only large short-selling hedge funds. The move may prompt an SEC investigation, an investigation in congress, and has already lead to a class action lawsuit on behalf of its users and any owner of the stock Robinhood’s actions affected.
All of that would lead to a lack of faith in a broker. Rightfully so. Robinhood was working within the terms and conditions they set for their app and brokerage. Therefore, if customers don’t like that, they may find that the service isn’t reliable or safe to use. A brokerage that isn’t safe isn’t a place you want to put your retirement savings.
Naturally, upset investors took to the App Store and Google Play to voice their frustrations over the unreliability of the Robinhood app and service. They reviewed the app with 1 stars, and even asked Apple to remove the app from the App Store to protect new users. They found Apple and Google protected Robinhood, much like Robinhood’s actions—unintentionally or not—protected hedge funds.
Yesterday, Robinhood had a <4.5 star review in Google Play. Negative reviews from people unhappy with the app, the very purpose of a review system, rated the app yesterday with just 1 star. The average rating plummeted down to 1.0 stars. Google says they removed “bad faith” or illegitimate reviews. What it seems is that they’ve removed all reviews from users unhappy about stock price fluctuations due to Robinhood’s buying freezes. Apple delayed reviews yesterday for moderation, and by this morning, outright deleted reviews as well. I know this because yesterday, I, a longtime user of Robinhood, rated the app on the App Store for being unreliable in the face of volatility, and today, that review is gone.
Legitimate vs Illegitimate Reviews
“A Google spokesperson confirmed the tech giant has deleted the reviews and defended the move overnight, telling Gizmodo over email that it has rules against “coordinated or inorganic reviews.” Gizmodo asked how negative reviews could be deemed “inorganic” when people seem reasonably upset about Robinhood’s actions in recent days. Google stopped responding to Gizmodo’s emails after that inquiry.”
– Matt Novak, writing for Gizmodo
Both Apple and Google have stepped in to protect Robinhood, despite the fact that their policies for the app are a legitimate cause for concern for users. Whether you agree with the negative reviews or not, the fact is, users are unhappy with the terms and conditions of the app. Their complaints are no different from those for apps that have invasive privacy policies. However, both Apple and Google have moved to protect the brokerage.
Make no mistake, what Apple did yesterday was the right thing to do. They didn’t immediately post reviews due to the rapid influx of negative reviews. These can often be reactionary, illegitimate reviews made specifically to drive a rating down out of spite. Often it can be for political reasons. In the past, it was done to harass a game developer because she and her team were women during the height of Gamergate. In these cases, it is a good idea to slow the flow of reviews so they, themselves, can be reviewed. Are people complaining about the app? Are these actual users of the app, or people who just downloaded it to place a negative review? Have they reviewed the app in the past?
However, what seems to have happened is that any negative review about Robinhood’s practices have been removed. Obviously fake positive reviews, have been allowed through. Positive reviews that simply say “That’s nice” or, “Neat” were allowed through. Today, Apple’s reviews do seem to have a few unhappy reviews from yesterday. However, the average review is still 4.7. On Google Play, the average review is up to 4.2 from 1.0 yesterday.
Illegitimate reviews would be complaints that are not about the app or service the app connects to. However, these reviews unhappy about freezing purchases and increasing market volatility are far from illegitimate. At their heart, they’re about the terms and conditions set by Robinhood as well as the risks associated with going to a smaller brokerage who cannot cover the costs of volatile markets. Robinhood’s reasoning for yesterday’s freezes seems contradictory. They deny cash liquidity issues, but claim covering the volatile stocks was too hard. That’s worrying. Fears about Robinhood’s ability to buy stocks or blocking the purchase of stocks are as legitimate as reviewing Facebook negatively over their privacy policy. It’s something users looking to find a broker would need to know about an app.
Robinhood has a class action lawsuit against it and may face investigation from the SEC and legislators. Those are things users should know before putting their savings on Robinhood.
Fervor Will Die Down
Over the next week or so, users will forget about this. Many will have moved to other brokers if they’re truly concerned about Robinhood’s practices or inability to cover market volatility. There will still be a lawsuit and likely investigations, but the review “bombing” will likely slow or come to a halt. This is when the reviews will be less likely to face immediate removal or moderation. Robinhood’s average rating will likely take a small hit, but won’t go as low as it did yesterday.
For years, Robinhood provided reliable service that customers loved using. It made trading stocks easy, even portions of stocks or cryptocurrencies. It was, as the name suggests a great way to “steal” from the rich. Even someone who could only invest a few dollars at a time could watch their savings grow.
Those years of mostly reliable service, with only a few major outages, earned it a good rating. But similarly, a decision that can spoil all of that trust should earn them a negative one. Actions that affect and hurt users are exactly what app store reviews are for.
While it’s true that Apple and Google should protect developers from malicious rating manipulation, they should also understand that reviews are there to protect users as well. Putting your life savings in a broker that is facing a class action lawsuit and possible investigations from a bipartisan group of legislators is risky, at best. Even by Robinhood’s own explanation, that they simply couldn’t cover the cash demands of paying out users and buying up new, constantly fluctuating stock is worrying. It’s the kind of problem that comes from a small investment firm, and it’s something someone should consider when thinking of trading apps with Robinhood or a larger broker. This is a risk due to the app and policies themselves, it’s important for users to know about an app’s reliability.
But, hey, the stock market’s all about risk, right?