WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One, N.A., and its parent company, Capital One Financial Corp., accusing the financial giant of depriving millions of consumers of over $2 billion in promised interest payments on savings accounts. According to the CFPB, Capital One engaged in deceptive practices by promoting its “360 Savings” account as a high-yield product while paying consumers significantly lower interest rates than they could have earned through an alternative account offered by the same institution.
Allegations of False Promises and Concealed Options
At the heart of the lawsuit are claims that Capital One intentionally misled its customers by touting its 360 Savings account as one of the nation’s “best” and “highest” interest accounts while freezing its rate at 0.30% from late 2019 to mid-2024, even as national interest rates climbed. During this time, Capital One introduced a similar product—“360 Performance Savings”—which offered significantly higher returns, at times exceeding the 360 Savings rate by 14 times.
The CFPB alleges that despite the Performance Savings account being virtually identical to the 360 Savings account in terms of structure and features, Capital One actively worked to prevent existing 360 Savings accountholders from learning about the higher-yield product. Actions cited in the lawsuit include subtle rebranding, exclusion of 360 Savings clients from marketing campaigns promoting the Performance Savings account, and strict instructions to Capital One employees to avoid informing customers about the higher-interest alternative.
“Banks should not be baiting people with promises they can’t live up to,” said CFPB Director Rohit Chopra. “The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts.”
Impact on Consumers
The financial harm caused by these practices was significant, with millions of Capital One customers losing out on billions in accrued interest. Many of these accountholders had previously been clients of ING Direct USA, a high-interest online savings bank that Capital One acquired in 2012. The lawsuit claims that customers were sold on the notion that their savings accounts would continue to generate “top” returns and “great rates,” a promise Capital One ultimately failed to keep.
Instead, from 2022 onward, the Performance Savings account rate rose in response to national trends, topping out at 4.35% by January 2024. Meanwhile, customers stuck with 360 Savings were left with stagnant interest rates, costing them substantial returns on their deposits.
CFPB’s Claims and Objectives
The CFPB’s lawsuit is grounded in allegations that Capital One misled its customers and violated federal laws, including the Truth in Savings Act. Specifically, the CFPB accuses the bank of fostering a “two-tier system” that allowed it to attract new high-yield depositors through the Performance Savings account while relegating millions of longstanding customers to the underperforming 360 Savings account.
The CFPB aims to bring Capital One’s alleged unlawful conduct to an end through its lawsuit. The agency is calling for financial redress to compensate harmed consumers and seeking civil penalties that would be directed to the CFPB’s victims relief fund.
Background on Capital One
Capital One, N.A., a leading national bank, holds assets exceeding $480 billion and operates under the umbrella of Capital One Financial Corp., which is headquartered in McLean, Virginia. Known for its wide array of deposit and credit products, the financial institution has long marketed its savings accounts as high-interest solutions for individual savers.
However, the CFPB alleges that this image was undermined by the bank’s decision to keep legacy 360 Savings accountholders in the dark about the Performance Savings option, creating an artificial divide between new and existing customers.
Legal and Financial Ramifications
This lawsuit represents a pivotal moment in the CFPB’s ongoing scrutiny of how financial institutions market savings products. It raises broader questions about the ethical and legal obligations of banks in ensuring transparency and fairness for their customers, especially as competitive interest rates become a significant factor in consumer choices.
By pursuing this case, the CFPB seeks not only to secure justice for those allegedly harmed by Capital One’s practices but also to emphasize the importance of accountability and trust within the banking industry. For millions of consumers, the outcome of this litigation could signal a renewed commitment to protecting depositors’ rights and ensuring that financial institutions deliver on their promises.
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