Capital One sued by US watchdog alleging the bank defrauded customers of $2 billion

NEW YORK — A U.S. watchdog is suing Capital One for allegedly misleading consumers about its high-interest savings account offerings — and “cheating” customers out of more than $2 billion in lost interest payments as a result.

In a complaint filed Tuesday, the Consumer Financial Protection Bureau took aim at Capital One’s promises and handling of its “360 Savings” accounts. Despite promoting 360 Savings as an account that offers one of the nation’s highest interest rates, the CFPB alleges that Capital One froze its interest rate at a low level for at least several years, even as interest rates rose nationally.

At the same time, the CFPB adds, the bank created “360 Performance Savings,” which experienced a much higher growth rate. But the agency says Capital One did not notify 360 Savings account holders of this new offer and “instead worked to keep them in the dark” — alleging the company marketed the products similarly to obscure their distinction and banned employees to “proactively tell” those with 360 savings accounts about 360 Benefit Savings.

Those 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 is seeking to impose civil penalties and provide financial relief to those affected.

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

In response, Capital One said 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 minutes to all new and existing customers without any of the usual industry restrictions.”

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

This means that the rate for 360 Performance Savings is almost 7.5 times higher than for 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 higher than 360 Savings.

The CFPB alleges that Capital One kept the rate for its 360 Savings accounts at 0.30% between December 2020 and at least August 2024. In contrast, the rate for 360 Performance Savings rose from 0.40% in April 2022 to as high as 4, 35% at early 2024 — falling slightly to 4.25% in August, the agency noted on Tuesday.

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