Isn't that a standard practice for brokerages -- loan out the shares that your clients are holding? I remember Ally Invest sent me some notice that I'd be receiving a cut of the profits when they loan out my shares.
IANAL but I think they can only do that if you've bought those shares on margin. They _may_ still be able to loan out shares you've 100% paid for unless you explicitly tell them not to.
Denying RH the ability to loan out shares was a tactic discussed on WSB
They can loan your shares out whether they are bought with cash or margin. Some brokerages allow you to opt of loaning your shares to short sellers. Robinhood pays you part of the interest made if they lend your shares out, but as far as I know there is no way to opt-out of share lending on Robinhood.
Its not standard in that you can choose not to lend out the shares, and for the GME situation, you expressly DON'T want the shares to be lent out to the shorters.
