CFPB Sues Capital One Over Alleged $2 Billion In Lost Interest For Consumers

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One Financial Corporation (NYSE: COF), alleging that the bank cheated millions of consumers out of more than $2 billion in lost interest. The CFPB claims that Capital One misled customers about the interest rates offered on its 360 Savings account and failed to inform them about a higher-yielding alternative, the 360 Performance Savings account.

Capital One marketed 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. 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. In contrast, the 360 Performance Savings account offered a substantially higher interest rate, increasing from 0.40% in April 2022 to 4.35% in 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, excluded 360 Savings accountholders from marketing campaigns advertising 360 Performance Savings, and forbade its employees from proactively telling 360 Savings accountholders about 360 Performance Savings.

Capital One's actions violated the Truth in Savings Act by misrepresenting the interest rates for 360 Savings and unfairly keeping customers in the dark about the more beneficial 360 Performance Savings account. The CFPB's lawsuit seeks to halt the alleged unlawful conduct, provide restitution to affected customers, and impose civil penalties on the bank.

Capital One has denied the allegations and stated that it will "vigorously defend" itself in court. 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." However, the CFPB alleges that Capital One deliberately misled customers by hiding the more lucrative 360 Performance Savings account and keeping them locked into the lower-yielding product.

The CFPB's lawsuit comes as Capital One is seeking regulatory approval for its proposed $35.3 billion acquisition of Discover Financial Services. Analysts have suggested that the lawsuit should not impact the proposed merger, as the CFPB does not have a formal say in the acquisition process. However, the negative publicity generated by the lawsuit may make a settlement a better option for Capital One politically.



In conclusion, the CFPB's lawsuit against Capital One highlights the importance of transparency and honesty in the banking industry. As consumers become more aware of the potential for deception and manipulation, they will increasingly demand greater clarity and accountability from financial institutions. The outcome of this lawsuit will have significant implications for Capital One and the broader banking industry, as it sets a precedent for how banks should treat their customers and the consequences of failing to do so.