US watchdog sues Capital One, accusing the bank of defrauding customers out of $2 billion

A US watchdog has sued Capital One for allegedly misleading consumers about its high-interest savings account offers – and as a result “cheated” customers out of more than $2 billion in lost interest payments.

In a complaint filed Tuesday, the Consumer Protection Bureau took aim at Capital One’s promises and handling of its 360 Savings accounts. Despite promoting 360 Savings as an account offering one of the highest interest rates in the country, the CFPB says Capital One froze its rate at a low level for at least a few years, even as national rates rose.

At the same time, the CFPB adds, the bank created “360 Performance Savings,” which showed a much higher growth rate. But the agency alleges that Capital One failed to notify 360 savings account holders of this new offer and “instead worked to keep them in the dark,” alleging that the company marketed the products similarly to hide their differences and prohibited employees from “proactively informing » about it. with 360 Savings accounts around 360 Performance Savings.

The actions mean Capital One “illegally evaded billions in interest payments to millions of consumers,” the CFPB wrote in its complaint Tuesday. The agency says it is seeking civil penalties and financial relief for those affected.

“Banks shouldn’t be baiting people with promises they can’t keep,” CFPB Director Rohit Chopra said in a prepared statement.

In response, Capital One said it strongly disagrees with the CFPB’s allegations and plans to “vigorously defend itself” in court. The banking giant added that it was “deeply disappointed that the CFPB continues its recent pattern of filing lawsuits at the eleventh hour before a change of administration.”

Capital One also claims that all of its 360 banking products “offer great rates” and “have always been available within minutes to all new and existing customers without any of the usual industry restrictions.”

According to information on Capital One’s website, the 360 ​​savings account currently has an interest rate of just under 0.50%. 360 Performance Savings savings accounts have an interest rate of about 3.74%.

This means that the 360 ​​Performance Savings rate is almost 7.5 times higher than the 360 ​​Savings rate today. But the CFPB says the two have been far apart in the past. In July 2024, the agency noted in Tuesday’s complaint, 360 Performance Savings was more than 14 times 360 Savings.

The CFPB alleges that Capital One maintained the rate for its 360 savings accounts at 0.30% from December 2020 to August 2024. The rate for 360 Performance Savings, by contrast, rose from 0.40% in April 2022 to 4.35% in April 2022. early 2024 – a slight drop to 4.25% by August, the agency said Tuesday.

The CFPB filed its complaint against Capital One less than a week before President-elect Donald Trump’s Jan. 20 inauguration. Despite the change in administration, some say this lawsuit may still be ongoing. Analyst commentary from TD Cowen on Tuesday noted that the CFPB was still filing enforcement actions during Trump’s first term, for example, although such lawsuits may also be easier to settle under a new administration.