WASHINGTON, D.C. – The Consumer Financial Protection Bureau is suing Capital One and its parent holding company, Capital One Financial Corp., for allegedly “cheating millions of consumers out of more than $2 billion in interest.”
The CFPB alleges that Capital One promised consumers that its flagship “360 Savings” account provided one of the nation’s “best” and “highest” interest rates, but the bank froze the interest rate at a low level while rates rose nationwide.
Around the same time, according to the complaint, Capital One created a virtually identical product, “360 Performance Savings,” that differed from 360 Savings only in that it paid out substantially more in interest—at one point more than 14 times the 360 Savings rate.
According to the suit, Capital One did not specifically notify 360 Savings accountholders about the new product, and instead worked to keep them in the dark about these better-paying accounts. The CFPB alleges that Capital One obscured the new product from its 360 Savings accountholders and cost millions of consumers more than $2 billion in lost interest payments.
The CFPB’s lawsuit seeks to stop the companies’ unlawful conduct, provide redress for harmed consumers, and impose civil money penalties, which would be paid into the CFPB’s victims relief fund.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” said CFPB Director Rohit Chopra. “Banks should not be baiting people with promises they can’t live up to.”
Capital One, N.A. is a national bank with more than $480 billion in assets and is a wholly owned subsidiary of Capital One Financial Corp. (NYSE: COF). Both entities are headquartered in McLean, VA. Capital One offers multiple deposit account products.
The CFPB alleges that Capital One schemed to keep 360 Savings accountholders in their lower-yielding accounts by obscuring 360 Performance Savings’ existence as a distinct product with a higher rate from 360 Savings accountholders.
For example, the suit claims, Capital One named and marketed the two products similarly; it eliminated nearly all references to the 360 Savings account product on its website and replaced them with references to the essentially identical 360 Performance Savings account, without notice that 360 Savings continued to exist as a distinct product; it excluded 360 Savings accountholders from a marketing campaign advertising 360 Performance Savings to Capital One’s other existing customers; and it forbade its employees from proactively telling 360 Savings accountholders about 360 Performance Savings.
