The CFPB alleges that Capital One obscured the new product from its 360 Savings accountholders and cost millions of consumers more than $2 billion in lost interest payments.
In 2013, Capital One rebranded “ING Direct” as “360 Savings,” and started offering 360 Savings accounts to the general public.
Capital One marketed its 360 Savings account as a “high interest” account with a variable interest rate that was “one of the nation’s” “top,” “best,” and “highest,” and would earn much more interest than the average savings account.
The CFPB alleges that Capital One schemed to keep 360 Savings accountholders in their lower-yielding accounts by obscuring 360 Performance Savings’ existence as a distinct product with a higher rate from 360 Savings accountholders.
Specifically, the CFPB alleges that Capital One: Misled consumers about “high interest” accounts: Capital One illegally deceived consumers and Capital One, N.A.
Washington, D.D.C. Capital One, N. was sued today by the Consumer Financial Protection Bureau (CFPB). a. additionally to Capital One Financial Corp., its parent holding company. in order to defraud millions of customers of over $2 billion in interest. According to the CFPB, Capital One allegedly deceived customers into believing that its flagship “360 Savings” account offered one of the “best” and “highest” interest rates in the country, but instead the bank kept the interest rate low while rates increased across the country. Around the same period, Capital One developed a nearly identical product called “360 Performance Savings,” which was only different from 360 Savings in that it paid out interest at a rate that was, at one point, more than 14 times that of 360 Savings. In order to keep 360 Savings accountholders in the dark about these higher-paying accounts, Capital One did not specifically inform them about the new product. Capital One allegedly deceived its 360 Savings accountholders about the new product, costing millions of customers over $2 billion in interest payments. This is according to the CFPB. In addition to redressing injured consumers, the CFPB’s lawsuit aims to stop the companies’ illegal behavior and impose civil money penalties that will be deposited into the agency’s victims relief fund.
According to CFPB Director Rohit Chopra, “Capital One is being sued by the CFPB for defrauding families of billions of dollars on their savings accounts.”. “Banks shouldn’t use unfulfilled promises to entice customers. “”.
N. Capital One. A. is a national bank that is fully owned by Capital One Financial Corp. and has assets of over $480 billion. NYSE: COF. The main office of both organizations is located in McLean, VA. Capital One provides a variety of deposit account options.
The online savings account product “ING Direct,” which was notorious for having interest rates higher than average, was part of the online bank ING Direct USA, which Capital One purchased in 2012. Capital One began offering 360 Savings accounts to the general public in 2013 after rebranding “ING Direct” as “360 Savings.”.
Capital One promoted its 360 Savings account as a “high interest” account that would yield significantly higher interest than the typical savings account. Its variable interest rate was described as “one of the nation’s,” “top,” “best,” and “highest.”. Additionally, it guaranteed that former ING Direct savings account holders would “still have great rates” with 360 Savings. In spite of the fact that rates were rising across the country, Capital One reduced and then frozen the 360 Savings account rate to just 0 percent from late 2019 to mid-2024. Beginning in early 2022, however, Capital One raised the rate for 360 Performance Savings accounts. In actuality, the rate increased from 0 percent in April 2022 to 3 percent in January 2023 and 4 percent in January 2024 at that time.
Unlawfully misled customers about “high interest” accounts: Capital One and Capital One, N. A. Disregarding the Truth in Savings Act, 360 Savings claimed to offer a variable interest rate that was “one of the nation’s” “top,” “best,” and “highest,” and that it would yield significantly higher interest than the typical savings account.
kept customers in the dark in order to maintain a two-tier system: Capital One concealed from its current customers its newer, significantly higher-interest 360 Performance Savings accounts, which otherwise shared all of the same terms, conditions, and features as 360 Savings, while falsely claiming that its 360 Savings account was and would be its only 360 high-interest savings product with the same features, terms, and conditions as 360 Savings. Instead of giving current depositors the interest they were promised, Capital One used 360 Performance Savings to entice new ones. Due to these actions, Capital One was able to avoid paying millions of customers more than $2 billion in additional interest.
Enforcement Measure.
The CFPB can take action against companies that violate consumer financial protection laws, such as the Truth in Savings Act, under the Consumer Financial Protection Act. It can also enforce the prohibitions on unfair, dishonest, or abusive acts and practices found in the Consumer Financial Protection Act. The Consumer Financial Protection Bureau (CFPB) aims to prevent Capital One’s illegal actions, compensate affected customers, and enforce civil money penalties that will be deposited into the CFPB’s victims relief fund.
Go over the complaint from today.
By calling (855) 411-CFPB (2372) or visiting the CFPB’s website, consumers can file complaints regarding financial products and services.