Capital One Sued for Deceptive Savings Account Practices

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., alleging that the bank deceived millions of consumers out of more than $2 billion in interest payments. The CFPB alleges that Capital One marketed its 360 Savings account as one of the nation's best and highest interest rates but froze the interest rate at a low level while rates rose nationwide. Around the same time, Capital One created a virtually identical product, 360 Performance Savings, which offered substantially higher interest rates but did not notify 360 Savings accountholders about this new product.

Capital One's marketing of its 360 Savings account as a "high interest" account 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, was misleading. 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. In contrast, starting in early 2022, Capital One increased the 360 Performance Savings account rate, with the rate going from 0.40% in April 2022 to 3.30% as of January 2023, and 4.35% as of January 2024.

The CFPB alleges that Capital One schemed to keep 360 Savings accountholders in their lower-yielding accounts by obscuring 360 Performance Savings’ existence as a distinct product with a higher rate from 360 Savings accountholders. The bank named and marketed the two products similarly, eliminated nearly all references to the 360 Savings account product on its website, and forbade its employees from proactively telling 360 Savings accountholders about 360 Performance Savings.

Capital One's actions cost millions of consumers more than $2 billion in lost interest payments. The CFPB's lawsuit seeks to stop the companies’ unlawful conduct, provide redress for harmed consumers, and impose civil money penalties, which would be paid into the CFPB’s victims relief fund.

“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” said CFPB Director Rohit Chopra. “Banks should not be baiting people with promises they can’t live up to.”

Capital One, N.A. is a national bank with more than $480 billion in assets and is a wholly owned subsidiary of Capital One Financial Corp. (NYSE: COF). Both entities are headquartered in McLean, VA. Capital One offers multiple deposit account products.

Capital One acquired online bank ING Direct USA, including its online savings account product, “ING Direct,” in 2012. In 2013, Capital One rebranded “ING Direct” as “360 Savings” and started offering 360 Savings accounts to the general public. Capital One assured former ING Direct savings accountholders that, with 360 Savings, they would “still have great rates.”

Capital One's strategic decisions regarding interest rates and product offerings significantly influenced its competitive position in the market. By freezing the interest rate of its 360 Savings account at a low level while rates rose nationwide, Capital One was able to attract new depositors with the promise of high interest rates without paying existing depositors the interest they were promised. This allowed the bank to maintain a two-tier system, where new depositors received higher interest rates than existing ones, giving Capital One a competitive advantage in attracting new customers.

At the same time, Capital One created a virtually identical product, 360 Performance Savings, which offered substantially higher interest rates. However, the bank did not notify 360 Savings accountholders about this new product and instead worked to keep them in the dark about these better-paying accounts. This strategic decision allowed Capital One to offer higher interest rates to new depositors without having to pay existing depositors the interest they were promised, further enhancing its competitive position.

By obscuring the existence of the 360 Performance Savings account from 360 Savings accountholders, Capital One was able to maintain a competitive advantage in attracting new depositors while avoiding paying existing depositors the interest they were promised. This strategic decision allowed Capital One to avoid paying more than $2 billion in additional interest to millions of customers, further enhancing its competitive position in the market.

Capital One's actions have likely led to a decline in consumer trust and a negative perception of the bank in the market, as customers feel they have been misled and taken advantage of. The CFPB's lawsuit against Capital One highlights the negative impact of the bank's actions on consumer trust and market perception. The agency seeks to stop the companies’ unlawful conduct, provide redress for harmed consumers, and impose civil money penalties to compensate those affected by the bank's deceptive practices.