CFPB sues Capital One for stealing over $2 billion from customers

In October 2023, the Consumer Financial Protection Bureau (CFPB) took legal action against Capital One, alleging the bank misled customers about the interest rates on its savings accounts. The CFPB claimed that Capital One confused customers by presenting its '360 Savings' account and the newer '360 Performance Savings' account as similar products, despite significant discrepancies in their interest rates. While the interest rate for the 360 Performance Savings account rose sharply from 0.4% to 4.35% between April 2022 and January 2024, the rate for the 360 Savings account was kept low at 0.3% for several years. Customers reportedly were not informed about the availability of the higher-yield 360 Performance Savings account and were misled into believing that the two accounts were equivalent. The CFPB noted that the bank's marketing strategies concealed the distinctions between the two accounts, with Capital One erasing references to the 360 Savings account on its website and excluding its holders from promotional materials that advertised the higher-return option. This lack of transparency was alleged to have cost customers over $2 billion in lost interest. CFPB Director Rohit Chopra emphasized that such practices are detrimental to consumers, indicating that banks have a responsibility to provide clear and truthful information regarding their financial products. In response to the lawsuit, Capital One firmly rejected the allegations, asserting that it operated with transparency in marketing its various savings options. The company expressed disappointment with the timing and nature of the lawsuit, highlighting that this legal action aligns with a larger pattern of what it views as aggressive regulatory practices ahead of a potential change in the administration. Capital One pledged to vigorously defend itself in court, maintaining that it had not engaged in any deceptive practices. The case highlights ongoing concerns regarding consumer protection in the banking sector. The allegations and resulting lawsuit not only spotlight the relationship between banks and their customers regarding the clarity of financial products but also raise broader questions about regulatory oversight. Advocates for consumers are calling for stricter regulations and improved practices to ensure that banks communicate effectively with customers about their financial products, especially concerning interest rates that significantly impact savings. The outcome of this lawsuit could lead to increased scrutiny and accountability for financial institutions across the industry.