Capital One Accused of Withholding $2 Billion in Interest from Millions of Customers

In a stunning development that has rocked the banking industry, Capital One is facing a federal lawsuit alleging it defrauded millions of customers of more than $2 billion in interest payments. The Consumer Financial Protection Bureau (CFPB) claims that Capital One deliberately kept account holders locked into outdated savings accounts with subpar interest rates, even as market rates soared.

This revelation has ignited outrage among consumers and industry watchdogs, casting a harsh spotlight on banking practices related to legacy account management and customer transparency.

The Allegations in Detail

At the core of the lawsuit is Capital One’s treatment of its once-popular “360 Savings” account, which was advertised as offering “top” and “nation-leading” interest rates. The CFPB alleges that while this account was heavily promoted, the bank deliberately froze its interest rate at 0.30% from 2019 to 2024, despite a series of nationwide interest rate increases driven by the Federal Reserve.

Simultaneously, Capital One introduced the “360 Performance Savings” account, a new product with far higher interest rates, starting at 0.40% in 2022 and climbing to an impressive 4.35% by January 2024. The CFPB contends that Capital One failed to adequately inform existing “360 Savings” account holders of the new, more lucrative option, instead keeping them in accounts with low returns.

This lack of disclosure, according to the CFPB, effectively robbed millions of customers of potential earnings during a time of economic uncertainty and inflation.

Consumer Impact: Billions Lost

The CFPB estimates that Capital One’s actions resulted in consumers losing more than $2 billion in potential interest earnings over a five-year period. For individual account holders, this could mean hundreds or even thousands of dollars in unrealized income, particularly for those with significant savings balances.

This case has broader implications, shining a light on the often-overlooked issue of “rate stickiness,” where financial institutions fail to raise interest rates on legacy accounts to match market trends.

Misleading Marketing Practices Exposed

The lawsuit also targets Capital One’s marketing claims about the “360 Savings” account. Descriptions such as “highest,” “top,” and “nation’s best” were allegedly used to lure customers into opening accounts, despite the bank’s unwillingness to keep rates competitive over time.

A Stark Rate Comparison

The CFPB lawsuit underscores the stark disparity between Capital One’s savings account products:

• “360 Savings” Account:
  • Interest rate: 0.30% (2019–2024).
  • Marketed as competitive but failed to keep up with rising national rates.
• “360 Performance Savings” Account:
  • Starting interest rate: 0.40% in 2022.
  • Reached 4.35% by January 2024, nearly 15 times higher than the “360 Savings” rate.

This difference highlights a concerning trend in the banking industry: failing to update legacy accounts while pushing new, more profitable products.

The CFPB’s Demands

In its lawsuit, the CFPB is seeking to:

1. Cease deceptive practices: Mandate full transparency about rate adjustments and new account offerings.
2. Provide restitution: Compensate affected consumers for their lost earnings, which total more than $2 billion.
3. Impose penalties: Levy civil fines to hold Capital One accountable and deter similar behavior in the future.

Capital One’s Response

Capital One has yet to issue a formal statement in response to the lawsuit. However, legal experts predict the case could have far-reaching consequences for the bank, both financially and reputationally.

Consumer Advocacy Groups React

Consumer advocacy groups have rallied behind the CFPB’s lawsuit, urging regulators to take swift action. Many are calling for broader reforms in how banks handle interest rate changes and inform customers of alternative products.

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What This Means for You

If you held a Capital One “360 Savings” account between 2019 and 2024, you could be eligible for restitution if the lawsuit succeeds. To protect your finances moving forward:

1. Review your accounts regularly: Ensure you’re earning competitive rates and consider switching if better options are available.
2. Ask questions: Don’t hesitate to contact your bank for information on higher-yield accounts.
3. Stay informed: Follow updates on the CFPB lawsuit and any potential restitution programs.

Broader Implications for Banking

The Capital One case is emblematic of a larger issue in the financial industry. As the Federal Reserve raises rates, banks often delay passing those increases on to customers, prioritizing their bottom line over customer loyalty.

The CFPB’s lawsuit could set a precedent for how banks handle interest rate disclosures, legacy accounts, and customer communication moving forward.