The Consumer Financial Protection Bureau (CFPB) has launched a lawsuit against Capital One, alleging the financial institution deprived its customers of approximately $2 billion through deceptive practices related to its savings accounts.
The banking giant, which serves more than 100 million customers and recently reported a 5% increase in quarterly revenue to $10 billion, is accused of deliberately misleading customers about interest rates on its savings products. The controversy centers around two similar products: the “360 Savings” account, introduced in 2013, and the “360 Performance Savings” account, launched in 2019.
According to the CFPB, Capital One advertised its 360 Savings account as offering the “highest” and “best” interest rates nationwide. However, the regulatory body claims the bank maintained artificially low rates on these accounts while national interest rates were rising. The situation became particularly stark between late 2019 and mid-2024, when Capital One allegedly kept the 360 Savings rate frozen at 0.30%.
In contrast, the bank’s 360 Performance Savings account saw
significant rate increases during the same period. The CFPB reports that this account’s interest rate rose from 0.40% in April 2022 to 3.30% by January 2023, eventually reaching 4.35% in January 2024. At one point, the Performance account’s rate was reportedly 14 times higher than the original 360 Savings rate.
The CFPB’s investigation revealed that Capital One allegedly employed various tactics to prevent existing 360 Savings account holders from learning about the more favorable Performance account option. These strategies included removing most references to the 360 Savings account from their website, replacing them with information about the Performance product, and excluding 360 Savings customers from marketing campaigns promoting the new account.
Moreover, the regulatory agency claims that bank employees were instructed not to proactively inform customers about the existence of the higher-yielding Performance account. CFPB Director Rohit Chopra criticized the bank’s practices, stating that financial institutions should not entice customers with promises they don’t intend to fulfill.
In response to these allegations, Capital One has defended its position. A spokesperson for the bank emphasized that the 360 Performance Savings product was prominently marketed, including through national television campaigns. The company expressed strong disagreement with the CFPB’s claims and criticized the timing of the lawsuit, suggesting it was politically motivated due to its proximity to an administration change.
The allegations come at a time when Capital One has been experiencing strong financial performance across various loan categories, including credit cards, auto loans, and consumer banking. The case highlights growing regulatory scrutiny of banking practices and their impact on consumer finances, particularly regarding transparency in savings product offerings and interest rate policies.
The litigation raises significant questions about the responsibility of financial institutions to maintain transparent communication with their customers about available products and rates, especially when newer, more advantageous options become available. As the legal process unfolds, the case could have broader implications for how banks market and manage their savings products, potentially leading to increased oversight of similar practices across the banking industry.