Capital One sued over deceptive savings rates
A U.S. watchdog is suing Capital One Financial Corp., alleging it cheated millions of consumers out of more than $2 billion in interest payments. Credit: AP/Richard Drew
A federal watchdog agency sued Capital One Financial Corp. Tuesday, alleging it cheated millions of consumers out of more than $2 billion in interest payments.
The U.S. Consumer Financial Protection Bureau alleges that McLean, Virginia-based Capital One advertised its 360 Savings account as “high interest” from 2013 to 2019, but from December 2020 to August 2024 kept the rate on that account at 0.3% while rates rose nationwide, according to the federal lawsuit filed in U.S. District Court in Alexandria, Virginia.
During the same time frame, Capital One created the 360 Performance Savings account, which the CFPB alleges was "virtually identical" to the 360 Savings account, except it had a substantially higher interest rate. Between April 2022 and August 2024, Capital One increased the rate of the higher-paying account from 0.4% to 4.25%.
That top rate is 14 times higher than the rate offered in the lower-yield account.
Capital One has 27 branches on Long Island, from Valley Stream to Mattituck.
The CFPB said the bank saved more than $2 billion by not increasing the interest rate of the 360 Savings account. It alleged the bank made representations to customers that “they would not have to closely monitor their accounts’ rate because they could rely on Capital One to deliver on its promises” the account would earn more than the average savings account.
The federal agency alleged Capital One obscured the existence of this higher-interest savings account from account holders who had the lower-interest account.
“Banks should not be baiting people with promises they can’t live up to,” Rohit Chopra, director of the CFPB, said in a statement.
In a statement to Newsday, the company noted the higher-yield 360 Performance Savings account was “marketed widely, including on national television” and was available to all new and existing customers without restrictions.
“We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration,” the company said in a statement. “We strongly disagree with their claims and will vigorously defend ourselves in court.”
The agency said Capital One’s conduct violates the federal Consumer Financial Protection Act by engaging in deceptive acts and practices as well as the federal Truth in Savings Act, which requires banks to provide disclosures about deposit accounts.
The average annual percentage yield on U.S. savings accounts was 0.56% on an annual basis for the week ending Jan. 6, according to a Bankrate survey of financial institutions. High-yield savings accounts, some of which require no minimum balance, offered as much as 4.5%, according to Bankrate data as of Thursday.
A federal watchdog agency sued Capital One Financial Corp. Tuesday, alleging it cheated millions of consumers out of more than $2 billion in interest payments.
The U.S. Consumer Financial Protection Bureau alleges that McLean, Virginia-based Capital One advertised its 360 Savings account as “high interest” from 2013 to 2019, but from December 2020 to August 2024 kept the rate on that account at 0.3% while rates rose nationwide, according to the federal lawsuit filed in U.S. District Court in Alexandria, Virginia.
During the same time frame, Capital One created the 360 Performance Savings account, which the CFPB alleges was "virtually identical" to the 360 Savings account, except it had a substantially higher interest rate. Between April 2022 and August 2024, Capital One increased the rate of the higher-paying account from 0.4% to 4.25%.
That top rate is 14 times higher than the rate offered in the lower-yield account.
Capital One has 27 branches on Long Island, from Valley Stream to Mattituck.
The CFPB said the bank saved more than $2 billion by not increasing the interest rate of the 360 Savings account. It alleged the bank made representations to customers that “they would not have to closely monitor their accounts’ rate because they could rely on Capital One to deliver on its promises” the account would earn more than the average savings account.
The federal agency alleged Capital One obscured the existence of this higher-interest savings account from account holders who had the lower-interest account.
“Banks should not be baiting people with promises they can’t live up to,” Rohit Chopra, director of the CFPB, said in a statement.
In a statement to Newsday, the company noted the higher-yield 360 Performance Savings account was “marketed widely, including on national television” and was available to all new and existing customers without restrictions.
“We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration,” the company said in a statement. “We strongly disagree with their claims and will vigorously defend ourselves in court.”
The agency said Capital One’s conduct violates the federal Consumer Financial Protection Act by engaging in deceptive acts and practices as well as the federal Truth in Savings Act, which requires banks to provide disclosures about deposit accounts.
The average annual percentage yield on U.S. savings accounts was 0.56% on an annual basis for the week ending Jan. 6, according to a Bankrate survey of financial institutions. High-yield savings accounts, some of which require no minimum balance, offered as much as 4.5%, according to Bankrate data as of Thursday.
Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.
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