CFPB Sues Capital One, Alleging Misleading Promotion of ‘Highest’ Rates
The Consumer Financial Protection Bureau (CFPB) sued Capital One Tuesday (Jan. 14), alleging that the bank promoted one savings account as offering one of the nation’s “highest” interest rates at the same time it offered another one that paid out rates that were as much as 14 times higher.
The regulator’s lawsuit seeks to put a stop to Capital One’s alleged unlawful conduct, provide redress for harmed consumers and impose civil money penalties that would be paid into its victims relief fund, the CFPB said in a Tuesday (Jan. 14) press release.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra said in the release. “Banks should not be baiting people with promises they can’t live up to.”
Reached by PYMNTS, Capital One said in an emailed statement that it “strongly” disagrees with the CFPB’s claims and will “vigorously defend” itself in court.
“Capital One is proud of its unique and industry-leading 360 suite of banking products, all of which offer great rates, carry no fees and no minimums, and have always been available in just minutes to all new and existing customers without any of the usual industry restrictions,” the bank said in its statement.
The CFPB alleged in its complaint that Capital One marketed its 360 Savings account as a “high interest” account with a variable rate that was one of the nation’s “best” even as it lowered and then froze the product’s rate at 0.30% from late 2019 to mid-2024 and increased its 360 Performance Savings’ account rate from 0.40% in April 2022 to 4.35% in January 2024.
The complaint also alleged that the bank took several steps to prevent 360 Savings account holders from learning about the existence of 360 Performance Savings.
“Capital One avoided paying more than $2 billion in additional interest to millions of customers because of these actions,” the CFPB’s press release said.
The complaint alleged that Capital One violated the Truth in Savings Act by promoting the 360 Savings account’s variable rate as “one of the nation’s” “top,” “best” and “highest.”
Capital One disclosed in an Oct. 31 filing with the Securities and Exchange Commission that it could face enforcement action by the CFPB regarding this issue.
In its statement released Tuesday, the bank said: “We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration.”
In commentary published Tuesday, TD Cowen Managing Director Jaret Seiberg wrote: “This dispute was well known. We do not see it impacting the Discover acquisition. We would give the bank the edge if it is litigated though it would raise negative headlines that may make a settlement a better option politically especially once [President-elect Donald] Trump’s regulators take control.”
It was reported in February 2024 that consumers were taking legal action after allegedly being deceived by their banks’ savings offerings.
On Monday (Jan. 13), the CFPB announced a proposed rule that it said aims to stop financial companies from using fine print in contracts that result in consumers waiving their legal rights or free speech.
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