Capital One was a sued by Consumer Financial Protection Bureau for allegedly misleading customers about its offers for high-interest saving accounts. The lawsuit claims that customers lost out on more than $2 billion of potential interest payments.
The Consumer Financial Protection Bureau filed a complaint on Tuesday that took aim at Capital One for its promises and the way it handled the “360 Savings” account, which was advertised as offering one of the highest rates of interest in the country. The CFPB claims that Capital One frozen its rate for several years at a low amount, despite the fact that rates were rising nationally.
The CFPB also claims that the bank created “360 Performance Savings” which offered a rate 14 times greater than the original “360 Savings”. This lawsuit is filed at a time that savers are benefiting from the Federal Reserve’s decision to increase interest rates as part of their effort to combat soaring inflation. Some banks offer high-interest saving accounts in order to lure savers.
Capital One has two different offerings. Some banks, however, have not increased rates on their accounts. This creates a gap in the rate between the low- and high-paying accounts. Capital One marketed its products in a similar way to hide their differences, according to the CFPB. Employees were forbidden to “proactively tell” 360 Performance Savings to those who had 360 Savings.
The CFPB stated that Capital One didn’t inform 360 Savings accountholders about the new product and instead tried to keep them unaware of these better-paying savings accounts. The lawsuit is filed at a time that savers are benefiting from the Federal Reserve’s decision of ratcheting interest rates in order to combat soaring inflation. This allowed banks to offer high-interest saving accounts after years with low rates.
Capital One responded by saying that it disagreed strongly with the CFPB’s allegations, and planned to “vigorously” defend itself in court. Capital One said it was “deeply dismayed” to see that the CFPB continued its recent trend of filing eleventh hour lawsuits in advance of a new administration.
Capital One said that its 360 banking products all “offer great rate” and are “always available within minutes to new and existing clients without the usual industry restrictions.”
Lost interest of Billions
The CFPB said that Capital One avoided “paying billions of dollars in interest to millions” through these actions. The agency claims it is seeking civil penalties as well as financial relief for those affected.
In a prepared press release, Rohit Chopra, Director of the CFPB said that banks should not lure people into making promises they cannot keep.
Capital One’s website discloses that 360 Savings account interest rates are currently just below 0.50%. 360 Performance Savings account interest rates are around 3.74%.
This means that the 360 Performance Savings rate is almost 7.5 times greater than 360 Savings. The CFPB claims that they were further apart in the past. The agency noted in its complaint of Tuesday that the 360 Performance Savings rate exceeded 14 times the 360 Savings rate as recently as July 2024.
The CFPB claims that Capital One maintained the rate of its 360 Savings account at 0.30% from December 2020 until at least August 2024. The 360 Performance Savings rate, on the other hand, rose from 0.40% at the beginning of 2024 to as high as 4.45%, according to the agency. By August, it had fallen to 4.25%.
The complaint by the CFPB against Capital One was filed less than a week before Donald Trump’s inauguration on Jan. 20, 2017. Some say that despite the change in administration this litigation may still survive.
TD Cowen’s analyst commentary on Tuesday pointed out that, for instance, the CFPB brought enforcement actions during Trump’s first tenure, even though such litigation could be settled more easily under the incoming Administration.
