The U.S. Consumer Financial Protection Bureau (CFPB) sued Capital One on Tuesday, accusing the banking giant of “cheating” millions of consumers who held a “high interest” savings account out of more than $2 billion in interest payments.
In a complaint filed in federal court in Alexandria, Virginia, the CFPB took aim at Capital One’s promises and handling of its flagship “360 Savings” accounts.
The watchdog agency said the Virginia-based bank told customers the flagship account would earn them significantly more interest than the average savings account and touted it as providing one of the nation’s highest and “best” interest rates.
Despite that promotion, the bank froze its rate for the flagship account at a low level of just 0.30 percent for at least several years between late 2019 and mid-2024, even as rates rose nationwide.
Around the same time, Capital One created a “virtually identical product” called “360 Performance Savings” that paid out substantially more in interest—at one point reaching 4.35 percent, more than 14 times the 360 Savings rate, the CFPB said.
The agency says Capital One failed to notify 360 Savings accountholders about the newer product and instead “worked to keep them in the dark about these better-paying accounts.”
According to the lawsuit, the bank gave the two products similar names and marketed them in a similar manner.
Capital One removed references to 360 Savings on its website and replaced them with references to 360 Performance Savings “without disclosing that 360 Savings continued to exist as a distinct product, thus implying the products were the same,” the lawsuit states.
The banking giant also did not specifically notify 360 Savings accountholders about the new product and excluded 360 Savings accountholders from a marketing campaign that advertised 360 Performance Savings to Capital One’s other customers, according to the CFPB.
The company also “explicitly forbade its employees from proactively telling 360 Savings accountholders about 360 Performance Savings,” the lawsuit states.
As a result, 360 Savings accountholders were either unaware of 360 Performance Savings or were “misled” into believing their 360 Savings accounts were 360 Performance Savings accounts with the higher rate, the CFPB said.
Capital One Condemns ‘Eleventh-Hour’ Lawsuit
“Capital One’s misconduct allowed it to use 360 Performance Savings to attract new deposits to fund its other banking activities, without having to pay existing 360 Savings accountholders the interest the Bank had promised they would earn from 360 Savings,” the lawsuit states.
“Because millions of 360 Savings accountholders never opened 360 Performance Savings accounts, the Bank has avoided paying over $2 billion in interest to these accountholders.”
The CFPB’s lawsuit seeks civil penalties and other relief to redress injury to consumers resulting from Capital One’s alleged violation of the Consumer Financial Protection Act of 2010 and the Truth in Savings Act.
In a statement announcing the lawsuit, CFPB Director Rohit Chopra said, “Banks should not be baiting people with promises they can’t live up to.”
A spokesperson for Capital One told The Associated Press that the bank strongly disagrees with the CFPB’s allegations and plans to “vigorously defend” itself in court.
The company was “deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration,” the spokesperson said.
Capital One also maintained that all of its 360 banking products “offer great rates” and have “always been available in just minutes to all new and existing customers without any of the usual industry restrictions.”
Capital One is among the largest U.S. banks and had $353.6 billion of deposits as of Sept. 30, 2024, Reuters reports.
The Epoch Times has reached out to Capital One for comment.
The Associated Press contributed to this report.
From The Epoch Times