NEW YORK (AP) — A U.S. watchdog agency has accused Capital One of misleading consumers about its services for high-interest savings accounts and “defrauding” customers of more than $2 billion in lost interest payments as a result. The lawsuit states:
In a complaint filed Tuesday, the Consumer Financial Protection Bureau criticized Capital One's promise and its handling of 360 Savings accounts. Despite touting 360 Savings as one of the accounts with the highest interest rates in the country, the CFPB says Capital One will keep interest rates low for at least a few years despite rising interest rates nationwide. They claim that the level was frozen.
At the same time, the CFPB added, the bank created “360 Performance Savings,” which significantly increased interest rates. But authorities said Capital One did not notify 360 savings account holders about the new service and “instead strove to keep them in the dark” and that the company sold similar products and The lawsuit alleges that it blurred the distinction and prohibited employees from “actively communicating” these matters. For a 360 Savings Account, approximately 360 Performance Savings.
These actions mean Capital One “unlawfully avoided paying billions of dollars in interest to millions of consumers,” the CFPB said in Tuesday's complaint. The agency said it aims to impose civil penalties and provide financial relief to those affected.
“Banks should not deceive people with promises they cannot keep,” CFPB Director Rohit Chopra said in a prepared statement.
In response, Capital One strongly disagreed with the CFPB's claims and said it intended to “vigorously defend” it in court. The major bank added: “We are very disappointed to see the CFPB continue its recent pattern of filing lawsuits at the 11th hour before a change of administration.”
Capital One also claims that all of its 360 banking products “offer competitive interest rates” and are “always available to all new and existing customers in just minutes, without the usual industry restrictions.” I did.
According to a disclosure on Capital One's website, the interest rate on the 360 Savings Account is currently just under 0.50%. The interest rate on the 360 Performance Savings account is approximately 3.74%.
This means your 360 Performance Savings rate is nearly 7.5 times higher than your current 360 Performance Savings rate. But the CFPB says the gap between the two was previously even wider. The agency noted in Tuesday's complaint that as of July 2024, the 360 performance savings rate was more than 14 times the 360 savings rate.
The CFPB alleges that Capital One maintained interest rates on 360 savings accounts at 0.30% from December 2020 through at least August 2024. In contrast, the 360 Performance Savings interest rate increased from 0.40% in April 2022 to 4.35% in April 2022. The agency announced Tuesday that it will decline slightly in early 2024 to 4.25% by August.
CFPB charges against Capital One to be filed within a week Inauguration ceremony on January 20th the next president donald trump. Some say the case could still survive despite the change in administration. Analyst commentary from Cowen TD on Tuesday noted that, for example, the CFPB is still filing enforcement actions during President Trump's first term, but such cases may become easier to resolve under the incoming administration.
