Capital One Sued for Allegedly Cheating Customers Out of $2 Billion

Capital One, one of the largest banks in the United States, is facing a lawsuit from the Consumer Financial Protection Bureau (CFPB) alleging that the bank cheated millions of customers out of more than $2 billion in interest payments on their savings accounts. The CFPB accuses Capital One of freezing the interest rates on its flagship "360 Savings" accounts at low levels while rates rose nationwide and launching a new account with better interest rates without informing existing customers.

Capital One marketed its 360 Savings accounts as "high interest" with a variable interest rate that was "one of the nation’s" “top,” “best,” and “highest,” and would earn much more interest than the average savings account. However, from late 2019 to mid-2024, Capital One lowered and then froze the 360 Savings account rate to just 0.30%, even as rates increased nationwide. Around the same time, the bank launched the "360 Performance Savings" account, which offered substantially higher interest rates, but did not notify 360 Savings accountholders about the new product.

The CFPB alleges that Capital One schemed to keep 360 Savings accountholders in their lower-yielding accounts by obscuring the existence of the 360 Performance Savings account. The bank named and marketed the two products similarly, eliminated nearly all references to the 360 Savings account product on its website, excluded 360 Savings accountholders from marketing campaigns, and forbade employees from proactively telling 360 Savings accountholders about 360 Performance Savings. As a result, millions of consumers missed out on more than $2 billion in lost interest payments.

Capital One has denied the allegations, stating that it is "deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration." The bank maintains that it marketed the 360 Performance Savings account widely, including on national television, with the simplest and most transparent terms in the industry.

The CFPB's lawsuit seeks to stop Capital One's unlawful conduct, provide redress for harmed consumers, and impose civil money penalties. The agency alleges that Capital One violated the Consumer Financial Protection Act's prohibitions on unfair, deceptive, or abusive acts or practices, as well as the Truth in Savings Act.

This case highlights the importance of transparency and honesty in banking practices, as well as the need for regulatory oversight to protect consumers from deceptive and abusive practices. As the banking industry continues to evolve, it is crucial for consumers to be informed and vigilant about the terms and conditions of their accounts, and for banks to maintain ethical and responsible business practices.