If a third-party donor's gift to a custodial account is reversed or challenged for any reason including ACH reversal or fraud, the custodian bears personal financial liability for the reversed amount, with no obligation on Robinhood to pursue recovery from the donor.
This analysis describes what Robinhood's agreement states, permits, or reserves. It does not constitute a legal determination about enforceability. Regulatory applicability and practical outcomes may vary by jurisdiction, enforcement context, and individual circumstances. Read our methodology
This provision assigns personal financial liability to the custodian for reversed or fraudulent third-party gifts to a minor's custodial account through the optional gifting feature, with recovery by Robinhood subject to the right of offset established in Section 31.8.
Interpretive note: The enforceability of personal custodian liability for third-party donor reversals may vary under applicable state UTMA fiduciary law depending on the jurisdiction.
The updated terms establish new fiduciary verification and personal liability provisions for trust and custodial accounts. Trustees are now required to complete Robinhood's identity verification and onboarding before accessing trust accounts, notify Robinhood promptly of any material changes to the trust (amendments, revocation, trustee changes), and provide the correct taxpayer identification number for the trust. The revised language states that trustees are personally liable for obligations, debts, or negative equity arising from instructions given outside the scope of their authority under the trust instrument or applicable law. Robinhood reserves the right to freeze trust accounts or request updated documentation at any time, and will rely on instructions from any onboarded trustee without requiring consent from co-trustees or verifying compliance with the trust instrument. You should consult a tax advisor regarding the appropriate taxpayer identification number for your trust and review your fiduciary authority under the applicable trust instrument before executing trades.
View change record →Under this clause, a custodian who enables the gifting feature becomes personally liable for any gift that is reversed, returned, or challenged, including reversals resulting from donor fraud or ACH failures, with Robinhood authorized to recover the amount through the right of offset described in Section 31.8.
Cross-platform context
See how other platforms handle Custodial Account Custodian Personal Liability and Gift Reversal Obligation and similar clauses.
Compare across platforms →"If a Donor's gift is reversed, returned, or challenged for any reason, including but not limited to ACH reversals or fraud, you agree that such reversal creates a personal Obligation for which you are liable. This Obligation is governed by the personal responsibility and recovery rights described above, including the Right of Offset in Section 31.8 and the custodial limitations (i)-(iv) applicable to such recovery. You acknowledge that Robinhood has no obligation to pursue a Donor for a reversed gift and that any recourse for the value of the gift is solely between you and the Donor.Excerpt from Robinhood's Customer Agreement (PDF)
REGULATORY LANDSCAPE: Custodial account obligations are governed by applicable state UTMA and UGMA statutes, which define the custodian's fiduciary duties and personal liability.
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This provision assigns personal financial liability to the custodian for reversed or fraudulent third-party gifts to a minor's custodial account through the optional gifting feature, with recovery by Robinhood subject to the right of offset established in Section 31.8.
Under this clause, a custodian who enables the gifting feature becomes personally liable for any gift that is reversed, returned, or challenged, including reversals resulting from donor fraud or ACH failures, with Robinhood authorized to recover the amount through the right of offset described in Section 31.8.
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