I think what Robinhood is doing with Gold accounts is pretty shady. I'm guessing that the vast majority of people who trade on margin don't fully comprehend the risks in doing so.
All brokerages offer margin and typically this is how they make their money, not commissions.
From what I've read in this thread that seems to be Robinhood's target market.
The guy was posting around about consumer law and how he should be able to get a refund.
That's someone having a laugh at the expense of a bunch of fools who think they're so much smarter than him.
Still, I'm predicting margin calls in someone's future.
Is there any risk related to avoiding the 3 day settlement?
Many amateurs using robinhood do so knowing they could loose their investment. So long as they don't loose more they'll hopefully be fine.
The broker first contacts the investor to allow them to deposit more money to bring up their equity percentage; if thet doesn't work, they sell the borrowed assets to get the percentage up.
One feature of margin loans is that you are required to have assets to cover them. A relic of the great depression, IIRC.
Does the broker have any recourse to credit bureaus or courts?
(Actually, I'm not sure what would happen if the stock went to zero instantly and was the only asset in the account.)