File photo: Sign outside Capital One Bank in Manhattan, New York, USA, November 12, 2021.
Andrew Kelly Reuter
The Consumer Financial Protection Bureau announced Tuesday that it is suing Capital One for misleading consumers about interest rates on savings accounts and “defrauding” them of more than $2 billion in interest.
The agency said in a statement that Capital One misled holders by confusing its 360 Savings account with the 360 Performance Savings account, a newer, higher-yield savings account option. The bank allegedly did not notify 360 savings account holders about the new option and marketed the two products similarly to trick customers into thinking they were the same.
However, the interest rates for the two options were significantly different, according to the CFPB. Capital One will raise the 360 Performance Savings interest rate from 0.4% in April 2022 to 4.35% in January 2024, while increasing the 360 Performance Savings interest rate to 0.3% from the end of 2019 through mid-2024. % and then frozen, the department said.
The CFPB claimed that the 360 Savings Account was advertised as a high-interest savings account, even though it had a relatively low interest rate. According to the bureau, Capital One is increasing its 360 performance savings by replacing all references to the account on its website with the similarly named “360 Performance Savings” option and excluding account holders from marketing campaigns touting higher yields. It said it aims to keep Savings users from knowing about high-yield options. Prevent employees from informing account holders about the 360 Performance Savings option.
“The CFPB is suing Capital One for defrauding families of billions of dollars in their savings accounts,” CFPB Director Rohit Chopra said in a news release. “Banks should not deceive people with promises they cannot keep.”
Capital One denied the allegations in a statement and said it sold its 360 Performance Savings accounts transparently.
“We deeply regret that the CFPB continues its recent pattern of filing lawsuits at the 11th hour in the face of a change of administration,” the company said in a statement. “We strongly disagree with their arguments and will vigorously pursue them in court. I will defend myself.”
The bank added that the 360 Performance Savings product is “widely sold, including on national television, with the simplest and most transparent terms in the industry.”
