Capital One sued by CFPB for ‘cheating’ customers out of billions in interest payments

The Consumer Financial Protection Bureau sued Capital One (COF+3.63%) on Tuesday for allegedly “cheating” people out of billions of dollars in interest payments on savings accounts.

The regulator alleged that Capital One advertised its 360 Savings account as a “high interest” account with a variable rate that it claimed was one of the best in the country. The bank then reportedly froze interest rates for those account holders and stopped offering it to new customers after 2019. It then introduced a nearly identical 360 Performance Savings account that differed only in that it paid “significantly more” in interest, it said the agency.

“The CFPB is suing Capital One for defrauding families out of billions of dollars in their savings accounts,” CFPB Director Rohit Chopra said in a declaration. “Banks shouldn’t lure people in with promises they can’t deliver.”

A Capital One spokesman said the company is “deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration” and that it will “vigorously” defend itself in court.

At one point last summer, the 360 ​​Performance Savings account was paying more than 14 times the 360 ​​Savings rate, according to complaint. The CFPB alleged that Capital One did not notify 360 Savings account holders of the new offer, instead keeping them in the dark about better-paying options.

“As a result of Capital One’s actions, 360 Savings Accounts were either unaware of 360 Performance Savings or were misled into believing their 360 Savings Accounts were 360 ​​Performance Savings Accounts with the higher rate,” the complaint states.

That resulted in account holders collectively missing out on nearly $2 billion in interest payments on their savings accounts, the CFPB claimed.

Rates on high-yield or high-interest savings accounts can be as much as 15 times higher than the Federal Deposit Insurance Corporation’s national average savings account rate and 10 to 12 times higher than “traditional” savings account rates.

However, the 360 ​​Savings account offered a rate of 0.30% between December 2020 and August 2024. That’s well below the national average of 0.46% last August, according to the FDIC.

Between April 2022 and August 2024, Capital One 360 ​​Performance Savings raised its rate from 0.40% to 4.25%, the complaint alleges.

Capital One did not immediately respond to Quartz’s request for comment.