The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One, accusing the bank of deceptive practices that potentially cost customers billions in lost interest payments.
At a Glance
- CFPB sues Capital One for allegedly misleading consumers about high-interest savings accounts
- Lawsuit claims Capital One “cheated” customers out of over $2 billion in lost interest
- Capital One allegedly kept interest rates low on “360 Savings” accounts despite national increases
- New “360 Performance Savings” account offered higher rates, but existing customers weren’t informed
- Capital One disputes allegations and plans to defend itself in court
CFPB Accuses Capital One of Deceptive Practices
The Consumer Financial Protection Bureau (CFPB) has taken legal action against Capital One, accusing the bank of engaging in deceptive practices related to its 360 Savings account. The lawsuit alleges that Capital One marketed the account with promises of high interest rates but subsequently froze the rates and ceased offering it to new customers after 2019.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra said.
According to the CFPB, Capital One’s actions resulted in customers missing out on nearly $2 billion in interest payments. The bureau claims that while the bank advertised its 360 Savings account as a “high interest” option, it maintained a rate of just 0.30% from December 2020 to at least August 2024, well below the national average of 0.46% as of last August.
At the heart of the controversy is Capital One’s introduction of a new product, the 360 Performance Savings account, which offered significantly higher interest rates. The CFPB alleges that Capital One failed to adequately inform existing 360 Savings account holders about this new option, effectively preventing them from maximizing their interest earnings.
The disparity between the two accounts was substantial. While the 360 Savings account remained at 0.30%, the 360 Performance Savings account saw its rate increase from 0.40% to 4.25% between April 2022 and August 2024. This significant difference in rates is at the core of the CFPB’s accusation that Capital One misled customers into believing they were receiving higher interest rates than they actually were.
Capital One’s Response and Legal Defense
Capital One has vehemently denied the allegations and announced its intention to contest the lawsuit. A spokesperson for the bank expressed disappointment with the CFPB’s actions, suggesting that the timing of the lawsuit, just before a change in administration, was questionable.
The bank maintains that its 360 banking products offer competitive rates and are accessible to all customers. Capital One has stated it will “vigorously defend” itself against the CFPB’s claims, emphasizing its commitment to fair and transparent banking practices. But the lawsuit is going ahead and will soon be determined.
This lawsuit could have far-reaching implications for both consumers and the banking industry. If successful, it may result in significant financial relief for affected Capital One customers. Moreover, it could set a precedent for how banks communicate about and manage different savings account products, potentially leading to more transparent practices across the industry.
This is one to watch if you’ve ever been a Capital One customer!