
A legal battle emerges as the Consumer Financial Protection Bureau takes action against Capital One, accusing it of deceiving savings account holders out of billions in potential interest earnings.
At a Glance
- The CFPB has filed a lawsuit against Capital One over the marketing of its 360 Savings account.
- Allegations include misleading consumers and withholding high-yield savings options.
- The lawsuit centers on a potential loss of $2 billion in interest earnings for accountholders.
- Capital One denies the claim, stating its products remain competitive and available.
Background of the Lawsuit
The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Capital One, alleging deceptive practices involving its 360 Savings account. The bureau claims that Capital One positioned the account as high-interest initially but later cut the rates and stopped opening new accounts. At the same time, it introduced the 360 Performance Savings account, which featured higher interest rates although existing customers were reportedly not informed about these better terms.
These actions have led the CFPB to accuse Capital One of withholding crucial information, which deprived many customers of potential interest gains upwards of $2 billion. According to the lawsuit, many customers of the original 360 Savings account missed out on more competitive interest rates offered by the newly introduced account.
Current Situation and Reactions
The suit asserts that customers were under the impression of receiving competitive interest rates, only for the reality to be different. From December 2020 to August 2024, the 360 Savings account interest rates were maintained at 0.30%, whereas the newer 360 Performance Savings rates increased significantly, peaking at 3.74%.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” – CFPB Director Rohit Chopra
Capital One contests these claims, pledging to “vigorously defend” its position as the case progresses through the courts. The bank argues that its suite of 360 savings products offers competitive rates and remains accessible to its consumers. Capital One describes the litigation as ill-timed, criticizing the CFPB’s filing just as a new administration prepares to take office.
Impact on Consumers and Next Steps
The CFPB is seeking financial restitution for those affected and has demanded civil penalties be imposed on Capital One. Amid the legal rhetoric, the core concern remains the alleged financial disadvantage suffered by 360 Savings account holders who could have benefited from higher yields.
This lawsuit, filed during a time of transition, raises questions about consumer protection and corporate responsibility. Both sides prepare for what is likely to be a prolonged court battle with significant reputational and financial implications.
Sources
1. Capital One sued by US watchdog alleging bank cheated customers out of $2 billion
2. Capital One sued for ‘cheating’ customers out of billions in interest on savings accounts