Jonathan Stempel
(Reuters) – Capital One was sued on Tuesday by the U.S. Consumer Financial Protection Bureau, accusing the bank of illegally defrauding customers who held its flagship “high-interest” savings account of more than $2 billion in interest.
The CFPB said in a complaint filed in federal court in Alexandria, Virginia, that Capital One promised savers that their 360 Savings accounts would have one of the “top,” “best,” and “highest” interest rates in the country, but instead Interest rates are frozen at just 0.30 even as deposit rates rise nationwide.
The CFPB also said that Capital One knew nothing about 360 Savings savers when it launched the 360 Performance Savings account in 2019, which was identical except for a significantly higher interest rate (to 4.35% in January 2024).
Capital One allegedly told branch employees not to proactively tell depositors they could switch accounts, or to send depositors to the bank’s account switching department unless they asked if switching was allowed.
“Banks should not lure people with promises they can’t keep,” CFPB Director Rohit Chopra said in a statement.
The CFPB said Capital One stopped offering 360 Performance Savings to new customers after launching it, a program that currently offers an annual yield of 3.8%, according to the bank’s website.
Tuesday’s lawsuit seeks civil penalties, restitution and other remedies for violations of the Consumer Financial Protection Act of 2010 and the Truth in Savings Act.
“We are deeply disappointed that the CFPB is continuing its recent pattern of filing last-minute lawsuits before a change of administration,” Capital One said in a statement. “We strongly disagree with their assertions and will vigorously defend ourselves in court. ”
The McLean, Virginia-based bank added that it markets its 360 Performance Savings accounts extensively, including on national television, “with the simplest, most transparent terms in the industry,” and that its 360 accounts all offer great interest rates.
Capital One is one of the largest banks and credit card companies in the United States, with $353.6 billion in deposits and $486.4 billion in assets as of September 30, 2024.
A nationwide private lawsuit trial involving 360 savings accounts is scheduled for July 2025 in an Alexandria court.
TD Cowen analyst Jaret Seiberg said in a research note that the CFPB lawsuit should not affect Capital One’s planned $35.3 billion acquisition of credit card rival Discover Financial Services.
The case is CFPB v. Capital One Financial Corporation et al., U.S. District Court for the Eastern District of Virginia, No. 25-00061.
(Reporting by Jonathan Stempel in New York; Additional reporting by Michelle Price in Washington, D.C.; Editing by Louise Heavens, Chizu Nomiyama and Rod Nickel)
