Capital One is facing a lawsuit from the U.S. Consumer Financial Protection Bureau (CFPB), which alleges the bank misled customers about its high-interest savings accounts and unlawfully withheld over $2 billion in interest payments. The complaint, filed Tuesday, accuses the bank of deceptive practices related to its “360 Savings” accounts, specifically accusing Capital One of failing to adjust interest rates in line with national increases, and instead offering more favorable rates through a different product without informing existing customers.
The CFPB claims that, while Capital One marketed 360 Savings as offering competitive interest rates, the bank froze the rate at a low level for years, even as national interest rates rose. Meanwhile, the bank introduced a higher-yielding “360 Performance Savings” account, but allegedly made no effort to notify 360 Savings accountholders about the new, better option. Instead, the bank reportedly employed tactics to obscure the differences between the two products, preventing employees from informing customers of the more lucrative offering.
The lawsuit, which seeks civil penalties and compensation for affected customers, accuses Capital One of avoiding billions in interest payments to millions of consumers by failing to provide transparency and fairness. According to the CFPB, Capital One’s actions were a deliberate effort to maximize its profits at the expense of its customers.
CFPB Director Rohit Chopra criticized the bank, stating, “Banks should not be baiting people with promises they can’t live up to.”
Capital One vehemently denies the allegations and plans to “vigorously defend” itself in court. A spokesperson for the bank stated that the CFPB’s lawsuit was part of a “pattern” of last-minute litigation before the change in administration. The company further defended its 360 Savings products, asserting that they “offer great rates” and have always been accessible to both new and existing customers without restrictions.
Despite Capital One’s defense, the differences in interest rates between 360 Savings and 360 Performance Savings accounts are stark. While the 360 Savings accounts currently offer a rate just under 0.50%, the 360 Performance Savings accounts boast an interest rate of approximately 3.74%. According to the CFPB, the gap between the two accounts was even more pronounced in previous years, with the 360 Performance Savings rate reaching more than 14 times the rate of 360 Savings in mid-2024.
From December 2020 through August 2024, the CFPB notes, the interest rate for 360 Savings remained frozen at just 0.30%, while the 360 Performance Savings rate steadily climbed, reaching as high as 4.35% in early 2024.
The CFPB’s complaint highlights the significant financial harm caused to consumers who were unaware of the better interest rates available to them. While Capital One maintains that it offered competitive rates across all its products, the lawsuit accuses the bank of intentionally obscuring information to keep customers in lower-interest accounts.
This legal battle comes on the heels of major regulatory changes and with the looming inauguration of President-elect Donald Trump on January 20. While the incoming administration could affect the future of such litigation, analysts suggest that the case may still move forward, pointing to previous enforcement actions under Trump’s first term.
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