
Capital One faces a lawsuit from the Consumer Financial Protection Bureau over alleged deceptive practices in its savings account promotions, potentially costing customers billions in interest.
At a Glance
- CFPB sues Capital One for allegedly misleading consumers about high-interest savings accounts
- Lawsuit claims customers lost over $2 billion in potential interest earnings
- Capital One accused of keeping 360 Savings rates low while offering higher rates on a new account
- Bank denies allegations and plans to defend itself in court
- Current interest rates: 360 Savings at 0.50%, 360 Performance Savings at 3.74%
CFPB Alleges Deceptive Practices
The Consumer Financial Protection Bureau (CFPB) has initiated legal action against Capital One, accusing the bank of misleading customers about its high-interest savings accounts. The lawsuit, filed just before the inauguration of President-elect Donald Trump, alleges that Capital One’s practices resulted in customers missing out on substantial interest earnings.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra said.
At the heart of the lawsuit is Capital One’s handling of its 360 Savings account. The CFPB claims that after promoting the account as a high-interest savings solution, Capital One froze interest rates and ceased offering it to new customers after 2019. Meanwhile, the bank introduced a new product, the 360 Performance Savings account, which offered significantly higher interest rates.
The CFPB’s lawsuit contends that Capital One’s actions resulted in substantial financial losses for account holders. According to the bureau, customers may have missed out on nearly $2 billion in interest payments due to the bank’s alleged failure to disclose the availability of the higher-interest 360 Performance Savings account to existing 360 Savings customers.
The disparity between the two accounts’ interest rates is significant. As of August 2024, the 360 Savings account offered a rate of just under 0.50%, while the 360 Performance Savings account boasted a rate of about 3.74%. The CFPB notes that the 360 Savings rate remained stagnant at 0.30% from December 2020 to at least August 2024, despite national interest rate increases during that period.
Capital One’s Response
Capital One has strongly refuted the allegations and announced its intention to contest the lawsuit. The bank maintains that its 360 banking products offer competitive rates and are accessible to all customers.
A spokesperson for Capital One expressed disappointment with the CFPB’s actions, stating, “deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration.” The bank argues that the timing of the lawsuit, just before a change in presidential administration, is questionable.
The CFPB is seeking civil penalties and financial relief for affected consumers. While the change in administration could potentially impact the course of the litigation, some analysts suggest that the lawsuit may continue despite the transition. The outcome of this case could have significant implications for how banks communicate changes in savings account terms and interest rates to their customers.
This is one to watch if you’ve ever used Capital One…