The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One and its parent company, Capital One Financial, accusing the banking institution of misleading consumers and causing over $2bn in lost interest payments.
Filed on 14 January 2024, the lawsuit alleges violations of the Truth in Savings Act and other consumer financial protection laws.
The CFPB claims that Capital One marketed its “360 Savings” account as offering one of the nation’s “best” and “highest” interest rates, assuring customers they would earn significantly more than average savings accounts.
However, between late 2019 and mid-2024, the interest rate on 360 Savings accounts was allegedly frozen at 0.30%, despite rising rates nationwide.
At the same time, Capital One introduced the “360 Performance Savings” account, which offered much higher interest rates, sometimes exceeding the 360 Savings rate by more than 14 times.
According to the lawsuit, Capital One failed to notify existing 360 Savings account holders about the 360 Performance Savings product. Instead, the bank allegedly worked to obscure the existence of the new account.
The CFPB contends that Capital One removed references to the 360 Savings account from its website and replaced them with information about the higher-yielding 360 Performance Savings account.
Marketing campaigns promoting the new product were reportedly directed only at customers without 360 Savings accounts, and employees were allegedly instructed not to inform existing customers about the new offering.
Capital One acquired ING Direct USA in 2012, rebranding its high-yield “ING Direct” savings account as “360 Savings” the following year.
The CFPB seeks to halt Capital One’s alleged deceptive practices, secure financial redress for affected customers, and impose civil penalties, which would be allocated to the CFPB’s victims’ relief fund.
CFPB Director Rohit Chopra said: “The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts.
“Banks should not be baiting people with promises they can’t live up to.”