New York’s Lawsuit Against Capital One

New York is taking legal action against Capital One for what it calls misleading practices, which the state claims have cost residents millions.

Attorney General Letitia James argues that the bank misled customers who opened 360 savings accounts by promising high-yield savings options. In a lawsuit filed on Wednesday, she contends that Capital One kept interest rates on those accounts artificially low. In 2019, the bank introduced a similarly named 360 performance savings account that offered an interest rate up to 14 times higher than the original 360 savings account.

The lawsuit states, “Due to Capital One’s confusing messaging, 360 savings customers remain unaware that their accounts are outdated and that they need to open a new 360 Performance savings account to access the advertised rates seen on the upcoming Capital One website.”

This issue echoes allegations brought forth by the Federal Consumer Financial Protection Agency just before the end of the Biden administration in January. However, the agency discontinued its actions after President Trump took office. James emphasized that New York’s lawsuit aims to hold Capital One accountable and seek compensation for all affected customers.

“New York families are striving to save for the future, and they deserve the full amount of interest that was promised,” she stated.

A representative from Capital One disputed James’s allegations, asserting pride in their range of 360 banking products.

According to the lawsuit, the bank claimed that 360 savings accounts offered “one of the country’s highest savings rates,” assuring consumers, “What’s the catch? Nothing.”

However, the claims made by James’s office suggest there was indeed a catch. While performance accounts increased in line with rising interest rates, the original 360 savings account remained stagnant at low rates.

Both accounts saw rates decline as the Federal Reserve cut rates to nearly 0% at the onset of the COVID-19 pandemic. Yet, national interest rates have since rebounded, rising to 3.30% in January 2023 and 4.35% in January 2024, while the original 360 savings accounts languished at 0.3%.

James’s office asserts that customers were kept in the dark about these changes, and as Federal Reserve rates have risen, “many banks and financial institutions, including Capital One, adjusted their deposit account rates.” The bank also reportedly removed all references to the original 360 account from its website.

Misleading practices, according to James’s office, could mean significant losses for customers who’ve been with Capital One for years.

The lawsuit points out that a customer who deposited $10,000 in a 360 savings account in September 2019 would have accrued just $186 in interest over five years.

James’s office alleges that New Yorkers collectively lost millions of dollars due to these practices.

This story will be updated with further details.