The logo of consumer lending company Capital One Financial Corp. will be found at its headquarters in McLean, Virginia on January 20, 2023.
Win McNamee | Getty Images News | Getty Images
New York Attorney General Letitia James sued Capital 1 on Wednesday, accusing customers of “fraud” in multi-million dollar interest payments months after the Trump administration’s Consumer Financial Protection Agency removed similar lawsuits against financial institutions.
In a complaint filed in Manhattan Federal Court, James left those customers in the dark by claiming that Capital One was selling “360 Savings” accounts as high-yield savings accounts, and then informing them of a new “360 Performance Savings” product that offers virtually high interest rates.
With interest rates rising since 2022, the state Attorney General’s Office said Capital has frozen interest rates on its 360 savings products to 0.3% and raised interest rates on its 360 performance savings accounts to 4.35%.
The lawsuit further alleges that Capital One has instructed employees not to tell customers about the new product “unless they explicitly ask 360 savings customers.”
The complaint mimics the CFPB lawsuit and was removed in February under Russell Vought, acting CFPB director for the Trump era. The lawsuit alleges that capital marketing has led to US customers missing out on more than $2 billion in interest.
The CFPB dropped case is one of many other enforcement lawsuits pursued by the agency under former CFPB director Rohit Chopra, and has been dismissed by President Donald Trump’s administration.
“Capital One guaranteed a high return without catches, then pulled out the rug from under the customer and hoped no one would notice,” James said in a statement Wednesday. “Large banks are not allowed to cheate their customers with false advertising and misleading promises.”
A spokesman for the capital said in a statement to CNBC it strongly opposed the Attorney General’s claims and “fiercely defends” itself in court.
“Our flagship 360 performance savings products are widely sold, including national television, and are always available in minutes to all new and existing customers, without the usual industry restrictions,” the spokesman said.
The bank also challenged the CFPB’s allegations earlier this year.
The New York lawsuit denies capital in violation of state law and seeks “reparation and damages for all affected capital one client.”
