Capital One was sued by the Consumer Financial Protection Bureau for allegedly misleading consumers about its offerings for high-interest savings accounts. As a result, customers lost more than $2 billion in potential interest payments, the lawsuit claims.
In a complaint filed Tuesday, the Consumer Financial Protection Bureau took aim at Capital One’s promises and handling of its “360 Savings” accounts, which were promoted as accounts providing one of the highest interest rates in the nation. But instead, the CFPB alleges, Capital One froze its rate at a low level for at least several years, even as rates rose nationally.
At the same time, the CFPB adds, the bank created “360 Performance Savings,” which had a much higher rate — at one point, more than 14 times higher than the original “360 Savings” accounts. The lawsuit comes at a time when savers have benefitted from the Federal Reserve’s decision to ratchet interest rates, part of its effort to fight soaring inflation. As a result, some banks have rolled out high-interest savings accounts to attract savers.
But at the same time, some banks haven’t boosted rates on their savings accounts, creating a gap between low-and top-paying accounts, similar to that of Capital One’s two offerings. According to the CFPB, Capital One marketed the products similarly to obscure their distinction and forbade employees “from proactively telling” those with 360 Savings accounts about the higher-paying 360 Performance Savings, the agency said.
“Capital One did not specifically notify 360 Savings account holders about the new product, and instead worked to keep them in the dark about these better-paying accounts,” the CFPB said in a statement. The lawsuit comes at a time when savers have benefitted from the Federal Reserve’s decision to ratchet interest rates to fight soaring inflation, which allowed banks to roll out high-interest savings accounts after years of meager rates.
In response, Capital One said that it strongly disagreed with the CFPB’s allegations and plans to “vigorously defend” itself in court. The banking giant added that it was “deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration.”
Capital One also maintained that all of its 360 banking products “offer great rates” — and have “always been available in just minutes to all new and existing customers without any of the usual industry restrictions.”
Billions in lost interest
These actions mean Capital One “illegally avoided paying billions in interest to millions of consumers,” the CFPB wrote in its Tuesday complaint. The agency says it’s seeking to impose civil penalties and provide financial relief to those impacted.
“Banks should not be baiting people with promises they can’t live up to,” CFPB Director Rohit Chopra said in a prepared statement.
According to disclosures on the Capital One’s website, 360 Savings accounts currently carry an interest rate of just under 0.50%. 360 Performance Savings accounts have an interest rate of about 3.74%.
That means the rate for 360 Performance Savings is nearly 7.5 times higher than that of 360 Savings today. But the CFPB says they’ve been farther apart in the past. In July 2024, the agency notes in Tuesday’s complaint, the 360 Performance Savings rate was more than 14 times that of 360 Savings.
The CFPB alleges that Capital One kept the rate for its 360 Savings accounts at 0.30% between December 2020 through at least August 2024. The rate for 360 Performance Savings, by contrast, climbed from 0.40% in April 2022 to as high as 4.35% at the start of 2024 — falling slightly to 4.25% by August, the agency noted Tuesday.
The CFPB’s complaint against Capital One comes less than one week before the Jan. 20 inauguration of President-elect Donald Trump. Despite the change in administration, some say this litigation could still survive.
Analyst commentary from TD Cowen on Tuesday noted that the CFPB still brought enforcement actions under Trump’s first term, for example, although such litigation may also be easier to settle under the incoming administration.
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