Robinhood UX & Gamestop: 5 Ways Changes Worsened the Crisis

The situation surrounding GameStop has been widely recognized as a novel instance of collective digital action, where individual investors united to challenge established Wall Street practices, particularly the strategies of hedge funds engaged in short selling.

But consider the challenges faced by a growing business or startup unexpectedly caught in the crosscurrents of such an extraordinary and rapidly unfolding situation, requiring swift adjustments to business strategies and product development. This is especially true when substantial damage to the company’s reputation is a potential outcome if plans don’t proceed as intended.

This was precisely the predicament experienced by the trading platform Robinhood last week. Despite its stated mission of democratizing access to financial markets, the company briefly restricted trading in GameStop, AMC, and other heavily discussed stocks. This decision sparked considerable frustration among users who felt the innovative fintech company was failing to live up to its principles. While the immediate justifications may have been related to temporary technical constraints, many Robinhood customers viewed the action with distrust, particularly given the company’s relationship with a major hedge fund client. Consequently, the Robinhood application was flooded with a large volume of negative one-star reviews on app stores, some of which were addressed with assistance from Apple and Google.

This raises the question of how user experience (UX) contributed to the events and how improved UX design choices might have lessened the negative reaction to Robinhood’s actions. To explore this, we consulted with Peter Ramsey, founder of Built for Mars and a UX specialist, who closely monitored Robinhood’s product modifications during the GameStop events.

For further insights into UX, Peter and Steve regularly contribute a UX column to Extra Crunch. Be sure to explore their recent UX analyses:

• Hulu UX teardown: Identifying 5 user experience shortcomings and potential solutions
• Disney+ UX teardown: Examining successes, failures, and areas for improvement
• Coinbase UX teardown: 5 areas for improvement and how to address them
• (Strategies for improvement) 5 prevalent UX errors in online banking

We will specifically examine five UX shortcomings and propose potential remedies. It’s important to note that the rapid pace of events presented a constantly evolving challenge for any product development team. Many of the identified UX issues have since been addressed. Nevertheless, valuable lessons can be drawn from this experience and applied to existing or future digital products, regardless of whether they encounter a similar crisis like the GameStop situation.

Addressing GameStop’s Visibility in Search Results

Robinhood’s response to increased trading activity in GME stock involved limiting users’ ability to purchase shares by removing GameStop from its search functionality.

The issue stemmed from Robinhood’s desire to prevent users from locating the page necessary to buy GameStop stock, leading to its removal from search results.

A better approach would have been to maintain GameStop’s presence within the search results. Eliminating it completely resulted in uncertainty for users, a lack of transparency regarding the change, and an appearance of questionable practices.

A core principle of effective user experience design is clarity and decisiveness; withholding information directly contradicts this principle.

(Robinhood reported restoring the search function for GameStop stocks on Thursday, January 28th).

Restricting GameStop Share Purchases

Users were still able to access the GME stock information page, however Robinhood opted to deactivate the purchasing function and displayed the following standard notification:

The shortcoming: Robinhood prevented customers from acquiring stock – effectively suspending open market access – and removed the buy option with a non-specific message.

The improvement: This action represents an unusual step for a brokerage, and the majority of Robinhood customers likely would not have anticipated such a scenario. The company should have provided a connection to further details outlining the reasons behind this decision. In this situation, due to a lack of adequate information, users turned to Twitter, but discovered no clarification on Robinhood’s official Twitter feed.

The principle: When communicating unfavorable news that will directly impact customers, it is essential to dedicate sufficient time to thoroughly explain the circumstances, the consequences for users, and the subsequent steps.

Fractional share purchases were temporarily restricted

Robinhood is well-recognized for offering fractional shares, however, the platform briefly prevented users from purchasing fractional shares of GameStop stock. This occurred after Robinhood reinstated the ability to buy shares, but implemented certain restrictions:

• Fractional share purchases were not permitted
• The quantity of shares available for purchase was limited

The issue: Users attempting to buy fractional shares encountered an error message after submitting their orders. While the message clearly stated the restriction, it failed to offer any explanation for the change.

The solution: Providing additional context to explain the reasoning behind this decision would have been beneficial. The company discontinued a primary benefit of using Robinhood without indicating whether this change was intended to be permanent.

The principle: It is insufficient to simply provide an explanation in a single location and assume all users will find it. Instead, proactively include links to a comprehensive explanation in all areas and features impacted by the restrictions.

Creating sell orders on your behalf

Reports surfaced on Twitter alleging that Robinhood was generating sell orders without user consent, and preventing users from cancelling these orders. (The company’s Terms and Conditions do, in fact, grant Robinhood the legal authority to take such action.)

The problem: Should these claims be accurate, it would indicate that Robinhood implemented significant measures to address challenges with their available capital. This action has a direct financial impact on their customers, yet the reasoning behind it remains unexplained.

Update: A Robinhood representative stated, “Allegations that Robinhood sold customer shares outside of our typical margin-related liquidation processes or options exercises are untrue.”

The solution: While effective user experience design cannot justify this situation, providing a clear explanation regarding the necessity of these actions would offer a reasonable justification. Furthermore, characterizing this as an “error” appears misleading, as it was not an unintentional mistake.

The principle: Restricting a user’s intended action is one matter, but assuming control and executing an action potentially against their wishes is quite different. Such actions should only be undertaken with adequate explanation, contextual information, and consideration for the user’s perspective.

Difficulties Obtaining Account Statements

Many users expressed a desire to transfer their assets away from Robinhood, reporting that other financial institutions required a “portfolio statement” to begin the transfer process.

Social media platforms experienced a surge in complaints as the function allowing users to “download statements” became non-operational throughout the weekend. Robinhood did not publicly acknowledge the issue, leading many to believe it was an intentional measure to prevent customers from withdrawing their funds.

The problem: Users encountered an error message when attempting to download their account statements. This wasn’t an isolated incident, with numerous individuals reporting consistent failures in accessing this feature.

The resolution: This issue, unlike others, doesn’t necessitate additional explanation, but it does require a backup solution to achieve the same outcome. Certain functionalities are critical and demand immediate attention, while others are less pressing.

The principle: Certain user actions are fundamental and should not simply result in failure. In such cases, it is essential to offer users an alternative method to accomplish their intended task.