Bait-and-Switch Allegations: Capital One Faces Lawsuit Over Savings Account Interest Rates
The U.S. Consumer Financial Protection Bureau (CFPB) has taken legal action against Capital One, accusing the bank of illegally withholding over $2 billion in interest from customers who held its flagship “high interest” savings account. According to a complaint filed in the Alexandria, Virginia federal court, Capital One promised customers top-tier interest rates but failed to deliver, instead freezing rates at a paltry 0.30% while deposit rates rose nationwide.
Deceptive Marketing Tactics
The CFPB alleges that Capital One created a new savings account, the 360 Performance Savings account, in 2019, which offered substantially higher interest rates, reaching 4.25% by August 2024. However, the bank obscured the existence of this new account to prevent customers from switching from the original 360 Savings account. This move, the CFPB argues, constitutes a clear violation of consumer trust.
CFPB Director Speaks Out
“Banks should not be luring people in with promises they can’t keep,” said CFPB Director Rohit Chopra in a statement. “We will hold financial institutions accountable for their actions and ensure that consumers receive the fair treatment they deserve.”
Capital One Responds
The bank has expressed disappointment and disagreement with the CFPB’s claims, stating that it marketed the 360 Performance Savings account widely, including on national television, with transparent terms. Capital One maintains that its 360 accounts offer competitive rates and will vigorously defend itself in court.
A Pattern of Deception?
This lawsuit marks the latest in a series of eleventh-hour filings by the CFPB ahead of a change in administration, according to Capital One. The bank’s response raises questions about the motivations behind the CFPB’s actions and the potential impact on the financial industry as a whole.
The Stakes Are High
As one of the largest U.S. banks, with $353.6 billion in deposits as of September 30, 2024, the outcome of this lawsuit could have far-reaching consequences for consumers and the banking industry. The case, CFPB v Capital One Financial Corp et al, is currently pending in the U.S. District Court, Eastern District of Virginia, No. 25-00061.
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