The Consumer Financial Protection Bureau Sues Capital One for Misleading Consumers

The Consumer Financial Protection Bureau (CFPB) announced on Tuesday that it is suing Capital One for misleading consumers about their savings account interest rates and “cheating” them out of more than $2 billion in interest.

Deception and Misleading Advertising

The CFPB alleges that Capital One deceived holders of its “360 Savings” account by conflating it with its newer and higher-yield savings account option, the “360 Performance Savings” account. The bank allegedly failed to notify 360 Savings account holders of the newer option and marketed the two products similarly to lead customers to believe they were the same.

Different Interest Rates

However, the interest rates of the two options were substantially different, according to the CFPB. Capital One increased the 360 Performance Savings interest rate from 0.4% in April 2022 to 4.35% in January 2024, while it lowered and then froze the 360 Savings rate at 0.3% between late 2019 and mid-2024.

Advertising and Marketing

Despite its relatively low interest rate, the CFPB alleged that the 360 Savings account was advertised as a high-interest savings account. The bureau said Capital One aimed to keep 360 Savings users in the dark about the higher-yield option by replacing all references to the account with the similarly named 360 Performance Savings option on its website, excluding account holders from marketing campaigns advertising the higher-yield account and forbidding employees from notifying account holders about the 360 Performance Savings option.

CFPB Director’s Statement

“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” said CFPB Director Rohit Chopra in a news release. “Banks should not be baiting people with promises they can’t live up to.”

Capital One’s Response

In a statement, Capital One denied the allegations and said it transparently marketed its 360 Performance Savings account.

“We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration. We strongly disagree with their claims and will vigorously defend ourselves in court,” the company said in a statement.

Conclusion

The CFPB’s lawsuit against Capital One highlights the importance of transparency and honesty in marketing and advertising financial products. Banks and financial institutions must ensure that they are not misleading consumers about the terms and conditions of their products.

FAQs

What is the Consumer Financial Protection Bureau?

The Consumer Financial Protection Bureau is a US government agency that regulates and supervises consumer financial products and services.

What is the lawsuit about?

The lawsuit is about Capital One’s alleged misleading advertising and marketing of its “360 Savings” account, which led to consumers being deprived of more than $2 billion in interest.

What is the interest rate on the 360 Savings account?

The interest rate on the 360 Savings account was allegedly 0.3% between late 2019 and mid-2024, while the 360 Performance Savings account had an interest rate of up to 4.35% in January 2024.

What is Capital One’s response to the lawsuit?

Capital One has denied the allegations and said it transparently marketed its 360 Performance Savings account.