
The Consumer Financial Protection Bureau has targeted Capital One with a lawsuit, accusing the banking giant of misleading advertising practices tied to its 360 Savings account.
At a Glance
- The CFPB claims Capital One misled consumers about high-interest savings accounts.
- The lawsuit reveals customers allegedly lost over $2 billion in interest payments.
- A new account with higher rates was offered, but many were left unaware.
- Capital One disputes the allegations and plans to defend itself in court.
- The CFPB is seeking financial relief for affected consumers.
The CFPB’s Claims Against Capital One
The Consumer Financial Protection Bureau (CFPB) initiated a lawsuit against Capital One, alleging that the bank misled consumers with deceptive advertisements about its 360 Savings account. Initially, this account was marketed as a high-interest savings solution but the CFPB claims the bank failed to adjust the interest rates for existing customers and obscured the introduction of the 360 Performance Savings account, which carried higher rates. Consequently, customers reportedly missed out on substantial interest earnings.
The lawsuit outlines that the 360 Savings account, once celebrated for its high interest rates, did not see rate adjustments in line with national increases. Meanwhile, the 360 Performance Savings account emerged, offering higher rates. The CFPB alleges that Capital One failed to adequately inform 360 Savings account holders about this new product.
Capital One’s Defense
Capital One has firmly denied the CFPB’s allegations and voiced its intent to “vigorously defend” itself against the claims. The bank’s spokesperson highlighted its disappointment with the lawsuit, suggesting it follows a pattern of the CFPB filing last-minute cases prior to administration changes. Capital One argues its savings products remain competitive and accessible.
“Deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration,” – A Capital One spokesperson
The lawsuit claims significant discrepancies between the interest rates of the two accounts, with the 360 Savings account offering around 0.30% while the 360 Performance Savings account rose to as much as 4.25%. Such disparities have reportedly led to consumers losing approximately $2 billion in potential interest payments.
Potential Outcomes and Consumer Impact
The CFPB is not just seeking civil penalties but also financial redress for the financial disadvantage customers may have experienced. The agency argues that by keeping existing customers in the dark, Capital One “illegally avoided paying billions in interest to millions of consumers.” The outcome of this legal battle could significantly impact thousands of account holders.
“Illegally avoided paying billions in interest to millions of consumers” – Consumer Financial Protection Bureau
With Capital One staunchly defending its position, and the CFPB pushing for accountability, the resolution of this case remains uncertain. Customers past and present should stay informed about developments, as the potential remedies could bring some financial relief if the lawsuit goes in favor of the CFPB.
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