Banks Under Fire: Capital One Accused of Misleading Consumers
The Consumer Financial Protection Bureau (CFPB) has launched a lawsuit against Capital One, alleging that the bank deceived customers about its high-interest savings accounts, resulting in over $2 billion in lost interest payments.
A Tale of Two Accounts
At the center of the controversy are Capital One’s 360 Savings and 360 Performance Savings accounts. While the bank promoted 360 Savings as offering one of the nation’s highest interest rates, the CFPB claims that the rate was frozen at a low level for several years, even as national rates rose. Meanwhile, the 360 Performance Savings account saw a much higher rate increase, but customers were not notified about this new offering.
Deception and Secrecy
The CFPB alleges that Capital One deliberately obscured the distinction between the two accounts, forbidding employees from informing 360 Savings customers about the more lucrative 360 Performance Savings option. This lack of transparency led to millions of consumers being cheated out of billions of dollars in interest payments.
Consequences and Repercussions
The CFPB is seeking civil penalties and financial relief for those affected. Director Rohit Chopra emphasized that banks must be held accountable for their promises, stating, “Banks should not be baiting people with promises they can’t live up to.”
Capital One’s Response
The bank has denied the allegations, vowing to “vigorously defend” itself in court. Capital One claims that all its 360 banking products offer great rates and have always been available to customers without restrictions.
The Interest Rate Gap
Currently, 360 Savings accounts carry an interest rate of just under 0.50%, while 360 Performance Savings accounts have a rate of about 3.74%. The CFPB notes that the rate gap has been even wider in the past, with the 360 Performance Savings rate being more than 14 times that of 360 Savings in July 2024.
The Road Ahead
The CFPB’s lawsuit comes just days before the inauguration of President-elect Donald Trump. While the change in administration may impact the litigation, some analysts believe that the case could still move forward, citing the CFPB’s history of bringing enforcement actions under previous administrations.
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