The social security number is a unique thing that every citizen has. It holds all the required information regarding a person, which means if someone gets hold of your SSN, they can essentially become you.
As the number holds so much information, it is pretty natural to raise an eyebrow when a website asks for it. And as you are reading this article, you already have done that by asking yourself why does Robinhood need my SSN.
Nonetheless, you just stumbled upon the right source to get the answer. We have done a good amount of research regarding what Robinhood is and how do they work. And upon learning all of that, we hope all your questions regarding the safety of your information will be answered. So, continue reading!
What Is Robinhood And What Does It Offer?
The main goal of Robinhood is the democratize finance for each of the individuals. They offer services and offer products that will let you start investing in your terms and pace. Also, according to their policy, each of the participants will get a taste of good investment deals, not just the rich.
Thanks to their financial news, it will be possible to learn about investing and all of the opportunities floating around. Also, they seek to revolutionize the way that people talk about markets through this type of news. And they are pretty transparent regarding the services that they offer.
Talking about transparency, you will get to know all the costs of the trades you are making. They will also be open regarding how their business works and how they are making money out of it. And as you will know the standards and stats behind each of the orders, it will be easier to make a quality execution.
Why Does Robinhood Require SSN?
Now that you have a good idea regarding the free-trading platform let us focus on the topic we have in hand. In a nutshell, all of the brokers need to collect the SSN of the users by order of the US government. That means even if you plan to use any other broker other than Robinhood, you would need to give them your SSN.
So, anyone that is looking to create an account on the platform will need to provide all of their personal information, including the SSN. But they do not only collect this info just because of the government’s order; there are other reasons behind it. It is a recommended practice for such organizations to collect these data.
Upon having the core info about the users, the organizations can self-regulate themselves. And that is not all; there are other reasons as well. Let us have a short discussion regarding them:
You might already know about the Securities and Exchange Commission (SEC). They regulate brokers like Robinhood, and according to their policy, these brokers must collect the users’ personal information during the registration process. That includes government ID, SSN, net worth, date of birth, name, and finally, address.
However, there are no technical legal orders regarding collecting the SSN if the users refuse to provide them. But most of the brokers are going to collect SNN for good-faith effort. This information will boost up their automation process and make it easier for the system to properly monitor your information.
Nonetheless, you will not have any luck in terms of refusing to offer the SSN to Robinhood. They will not simply allow you to create an account. And consider how barebones their customer support is; you will not be able to debate on the merits of the requirements with a rep.
The US Department of Treasury and the SEC jointly implemented a rule. It goes by the name of customer identification rule. According to this rule, all financial institutions must collect your SSN before allowing you to make an account. And the brokers such as Robinhood falls under the same financial institution category.
All of the SSN information will make it easier for the institutions to identify you as a person. Also, they will check if your name is on the government’s list of suspected terrorists or you were involved in any of the crimes or not. The rule also acts as a preventive measure in terms of money laundering.
Now, how is there a connection between money laundering and terrorists? Well, they rely on this process as a primary funding method. For that reason, even if you are not legally bound to provide the SSN to these websites for record-keeping, you must provide it for the customer identification process.
That is why you will not have any luck in terms of bypassing the rule while creating an account on the website.
To Determine Investment Suitability
Other than all of the legal requirements and rules, there is the involvement of other organizations as well. The brokers are generally advised by organizations such as FINRA to collect all of the user’s personal information. But why?
According to those organizations, this collection of data will put the brokers in a better place to help you reach all of your financial goals. Additionally, it will make the brokers incapable of putting too much restriction on the process of achieving your goals.
Alongside that, information such as net worth, career history, and salary will make the brokers correctly understand your personal situation. It will also aid them in determining the risk and make it easier for you to make the right decisions in terms of investments.
Is It Safe To Give Robinhood Your SSN?
As we have mentioned above, the SSN is sensitive data. If it goes to the wrong hands, you can load loans, debt, and criminal records, which you might not know about. For that reason, people always recommend being a bit skeptical while providing this info.
However, you will be happy to know that it is entirely safe to give this information to Robinhood. Now, we know that this organization is considered to be a relatively low-cost broker. But that is what they are aiming to provide — good investment opportunities for all of the people.
Even after being a low-cost broker, they are no less or more safe than the other expensive and high-end financial institutions. In fact, as an all-digital platform, they are more alert regarding the common cyberthreats. Their preventive measures regarding those threats have worked like a charm up until now.
In addition to that, their up-to-date protection technology will surely work properly in the future. We believe that their programmers are better than those working on most banks and mid-sized financial organizations. So, you can completely trust them with your data.
Can I Create A Robinhood Account Without Providing SSN?
For the government regulations and the involvement of other financial-related regulations, all the brokers that are operating in the USA are required to collect the SSN. It helps them properly regulate their users and put preventive measures not to offer the wrong hands more opportunity to launder money.
Considering that, Robinhood needs to collect your data if they allow you to create an account. There is no workaround regarding this, and no matter what you try, you will not be able to create an account without providing your SSN.
On that note, even though Robinhood is pretty young, it is now at a rapid pace in terms of growth. And the security technology that they rely on is up to the mark. In fact, they are more innovative than most of the banks and brokers that are available in the states. That means your data have less chance of getting leaked.
Do Other Stock Investing Apps Require SNN?
Yes. As we have mentioned above, the government requires the stock or finance institutions to collect SSN and other relevant information about the user. Considering that, all of the Stock Investing Apps or organizations should ask for SSN. If they do not, they will not be able to regulate and verify the customers.
However, before giving away this sensitive data to any of these apps or finance organizations, you should do a background check. Check whether they are a fraud or not. Also, you can gain peace of mind by factoring in how transparent the organization is regarding the data they collect.
If the terms and conditions state all the things you need to know and if the organization seems legit, input your SSN without worrying too much. However, if the case is totally opposite, we would not recommend giving them any data at all.
Regarding the question of why Robinhood requires my SSN, it is mostly to comply with record-keeping rules, verify your identity, and prevent any money laundering acts from happening. And Robinhood is pretty reputed and transparent about their policy. So, you can give them the SSN without thinking too much.