Capital One allegedly defrauded customers out of $2 billion in interest, CFPB alleges

The capital was sued by the Consumer Financial Protection Bureau for allegedly misleading consumers about its offers for high-interest savings accounts. As a result, customers lost more than $2 billion in potential interest payments, the lawsuit alleges.

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 offering one of the highest interest rates in the country. But instead, the CFPB claims, Capital One has frozen 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 benefited from the Federal Reserve’s decision to raise interest rates, part of its efforts to combat rising inflation. As a result, some banks have rolled out high-interest savings accounts to attract savers.

But at the same time, some banks have not raised interest 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 prohibited 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 higher-paying accounts,” the CFPB said in a statement. The lawsuit comes at a time when savers have benefited from the Federal Reserve’s decision to raise interest rates to combat soaring inflation, which allowed banks to roll out high-interest savings accounts after years of meager interest rates.

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.”

Billions in lost interest

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.

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 Jan. 20 inauguration of President 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.