The Consumer Financial Protection Bureau is taking on Capital One in court, and the financial stakes are enormous.
At a Glance
- CFPB accuses Capital One of misleading consumers about high-interest savings accounts.
- The lawsuit claims Capital One “cheated” customers out of over $2 billion in lost interest.
- Capital One denies allegations, promising to “vigorously defend” its practices.
- CFPB seeks civil penalties and financial relief for affected consumers.
Allegations Against Capital One
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One, alleging deceptive practices in marketing their 360 Savings accounts as high-interest options. Advertised as lucrative, the account’s interest rates were allegedly frozen, with the bank later offering the 360 Performance Savings account at higher interest rates without adequate notification to existing customers.
Many customers reportedly lost significant potential earnings. “The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra stated. The organization claims Capital One misled customers regarding interest rate details, resulting in a lack of billions of dollars in interest payments.
Difference in Savings Accounts
The CFPB lawsuit highlights the continuation of low interest rates on Capital One’s 360 Savings accounts amidst rising national rates. The performance savings account, however, reportedly offered competitive rates around 3.74%, far surpassing the 0.50% interest rate of the 360 Savings accounts. Historically, this discrepancy pointed to a significant gap, with customers allegedly receiving a lower service offering.
The distinction between these products attracted scrutiny that compounded with the CFPB’s assertion that Capital One obscured differences, limiting employee communication about the superior product. Accusers believe had the information been transparent, the financial landscape for these account holders could have dramatically changed.
Capital One’s Standpoint
Capital One disputes the allegations brought forth by the CFPB. A spokesperson expressed disappointment with the lawsuit’s timing, describing it as part of a pattern by the CFPB to file cases before a change in administration. Capital One insists its practices and interest rates offer fair value to customers, committing to defending their stance legally.
“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 noted. They further emphasized their readiness to “vigorously defend” their financial practices in court, aiming to clear their reputation from these accusations.
Sources
1. Capital One sued for ‘cheating’ customers out of billions in interest on savings accounts
2. Capital One sued by US watchdog alleging bank cheated customers out of $2 billion
