Watchdog sues Capitol One over $2 billion in lost interest payments 

Capitol One allegedly cheated customers out of $2 billion in interest payments.

A lawsuit has been filed by the Consumer Financial Protection Bureau (CFPB) against Capital One, accusing the bank of deceiving customers regarding high-interest savings accounts.

The CFPB alleges that Capital One misled consumers by freezing interest rates on its 360 Savings accounts at a low level for several years, despite national rate increases.

The big picture: Capital One introduced 360 Performance Savings with significantly higher rates, but failed to notify 360 Savings account holders about this new option, keeping them unaware to avoid paying out more interest.

  • The CFPB claims that Capital One’s actions resulted in the bank avoiding billions of dollars in interest payments to millions of customers, leading to a loss of over $2 billion in interest payments.

What they’re saying: CFPB Director Rohit Chopra criticized Capital One in a statement. 

“Banks should not be baiting people with promises they can’t live up to,” CFPB Director Rohit Chopra said. 

  • In response to the allegations, Capital One strongly disagreed with the CFPB’s claims and vowed to defend itself in court, expressing disappointment in the timing of the lawsuit as it nears a change in administration.
  • Capital One defended its banking products, asserting that all its 360 offerings provide competitive rates accessible to both new and existing customers without industry limitations.

Go deeper: Currently, Capital One’s 360 Savings accounts have an interest rate of approximately 0.50%, while 360 Performance Savings accounts offer around 3.74% interest, which is nearly 7.5 times higher.

  • The CFPB highlighted that the rate gap between 360 Savings and 360 Performance Savings was much wider in the past, with the latter’s rate being over 14 times higher at one point.
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