Capital One is embroiled in legal battles with the Consumer Financial Protection Bureau over accusations of deceptive savings account practices.
At a Glance
- CFPB sues Capital One for misleading consumers regarding 360 Savings accounts.
- Lawsuit claims over $2 billion in lost interest for affected customers.
- Discrepancy in interest rates between 360 Savings and 360 Performance Savings accounts.
- Capital One plans to contest the allegations in court.
CFPB Lawsuit Details
The Consumer Financial Protection Bureau (CFPB) has taken legal action against Capital One. They allege that the bank misled consumers by freezing interest rates on its 360 Savings accounts, while simultaneously launching a new savings option with better returns. This lawsuit comes after many customers missed out on significant interest earnings.
Capital One promoted the 360 Savings accounts as high-return options, but customers were reportedly not informed of the better rates available through the 360 Performance Savings accounts. The CFPB accuses the bank of withholding crucial information that would have enabled consumers to switch to higher-yielding options sooner.
Financial Impact and Responses
The CFPB estimates the financial loss to customers in excess of $2 billion, due to unreasonably low interest rates kept by Capital One in comparison to industry standards during that period. According to the CFPB, the 360 Savings rate lingered at 0.30% for several years, starkly lower than the more competitive 360 Performance Savings account rates.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” – CFPB Director Rohit Chopra
Despite these assertions, Capital One has criticized the timing of the lawsuit, calling it an “eleventh hour” action by CFPB. The bank states it plans to “vigorously defend” itself, asserting that their savings products offer competitive rates accessible to all customers.
Ongoing Legal Proceedings
The legal fight is expected to continue for some time, especially as Capital One refutes claims of misleading advertising or wrongful conduct. The company stated its disappointment with the lawsuit’s timing, which arrived just before the US administration change.
Meanwhile, the CFPB seeks civil penalties and intends to secure financial relief for those affected. With much at stake for affected customers, this case will likely draw considerable public attention and possibly influence banking regulations in the future.
Sources
1. Capital One sued by US watchdog alleging bank cheated customers out of $2 billion
2. Capital One sued for ‘cheating’ customers out of billions in interest on savings accounts
