Capital One sued by US watchdog alleging bank cheated customers out of $2 billion

NEW YORK (AP) – A U.S. watchdog is suing Capital One for allegedly misleading consumers about its offers for high-interest savings accounts and “cheating” customers out of more than $2 billion in lost interest payments as a result.

In a complaint filed Tuesday, the Consumer Financial Protection Bureau took aim at Capital One’s promises and its “360 Savings” accounts. has kept its interest rate low for at least a few years, even as interest rates have risen nationally.

At the same time, the CFPB added, the bank created “360 Performance Savings,” which saw much higher rate increases. But the agency said Capital One did not notify 360 Savings accountants of this new offering and “instead employed them. to keep in the dark,” alleging the company sold similar products to hide the difference and prohibiting employees from “proactively telling” those who have 360 ​​Savings accounts for about 360 Performance Savings.

The actions mean Capital One “illegally avoided paying billions in interest to millions of consumers,” the CFPB wrote in its complaint Tuesday.The agency said it is seeking civil penalties and financial relief provide to victims.

“Banks shouldn’t be baiting people with promises they can’t keep,” CFPB Director Rohit Chopra said in a prepared statement.

In response, Capital One said it strongly disagrees with the CFPB’s allegations and intends to “vigorously defend itself” in court. example before the change of administration.”

Capital One also claims that all of its 360 banking products “offer great interest rates” and “have always been available within minutes to all new and existing customers without the usual industry restrictions.”

According to Capital One’s website, 360 Savings accounts currently have an interest rate of just under 0.50%. 360 Performance Savings accounts for around 3.74%.

That means 360 Performance Savings’ rate is nearly 7.5 times higher than 360 Savings today, but the CFPB said they were further apart in July 2024 in Tuesday’s complaint the 360 ​​Performance Savings rate was more than 14 times that of 360 Savings, the agency notes.

The CFPB claims that Capital One kept the rate for its 360 savings accounts at 0.30% from December 2020 through at least August 2024. By contrast, the 360 ​​Performance Savings rate was 0.00% in April 2022. Up from 40% to 4.35% early 2024 slightly falling to 4.25% in August, the agency said on Tuesday.

The CFPB complaint against Capital One was filed a week ago January 20 inauguration of the elected president Donald Trump. Despite the change in administration, some say this litigation could still survive. On Tuesday, a TD Cowen analyst noted that the CFPB, for example, still used enforcement actions during Trump’s first term, although such litigation may also be easier to settle. under the incoming administration.