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What Isn't in Their Wallet? Capital One Accused of Cheating Consumers

By Kit Yona, M.A. | Last updated on

In their ads, Capital One likes to ask us what's in our wallet. For their sake, they should hope that spokesperson Jennifer Garner has a law degree in hers.

The Consumer Financial Protection Bureau (CFPB) filed a complaint on Jan. 14, 2024, in the U.S. District Court in the Eastern District of Virginia against Capital One. The CFPB alleges Capital One deceived its consumers and avoided paying them billions in interest.

Waning Interest

The complaint accuses Capital One of both deceptive marketing and creating a two-tier system that denied existing customers better interest rates. The CFPB is invoking its authority under the Consumer Financial Protection Act (CFPA) and the Truth in Savings Act (TISA) to put an end to Capital One's deceptive business practices while securing relief for those wronged.

The five counts brought in the lawsuit focus on Capital One's 360 Savings accounts. In 2012, Capital One acquired ING Direct USA, an online bank known for the high interest offered by its ING Direct saving product. Capital One changed the name of the program to 360 Savings. Between 2013 and 2019, the product was marketed as a "high interest" savings account and touted its "great rates."

High interest rates are the selling point of high-yield savings accounts. Between 2013 and 2019, Capital One's website showed how 360 Savings outperformed the national average of return for savings accounts. The rate of return for the 360 Saving accounts would fluctuate with changes in the market, rising and falling accordingly.

During this period, customers were assured that 360 Savings was the only "high interest" savings account at Capital One and that the rates were among the best in the country. The complaint alleges this was designed to make consumers feel that their accounts didn't need routine monitoring.

In 2019, Capital One launched a new product that offered high-yield results. 360 Performance Savings was identical in all ways to 360 Savings save one - it offered a higher interest rate.

Pay No Attention to That Program Behind the Curtain

360 Performance Savings launched with an interest rate of 1.9%, which was higher than 360 Savings' 1.0% at the same time. Consumers in 360 Savings were not alerted to the 360 Performance Savings product, nor was there an offer to roll their accounts into the new, better-performing program.

As interest rates plummeted during the end of the first Trump Administration, so did the returns of both Capital One 360 accounts. 360 Savings bottomed out at 0.30%, while 360 Performance's low was 0.40%.

As the economy recovered during the Biden Administration, interest rates also rose. By January 2024, the rate for the 360 Performance Savings was up to 4.35%. However, the 360 Savings program remained at 0.30% despite no real differences between the accounts. With no legitimate reason for not raising the 360 Savings rate as well, Capital One deprived its consumers of a deserved return on their investments.

Capital One removed almost all mention of 360 Savings from their website during this period, making it confusing to differentiate between the plans. This may have been due to a 2022 survey showing that more than half of their customers rarely checked their accounts, and almost half didn't know their current interest rate.

Full Count

The counts brought by the CFPB accuse Capital One of violating the CFPA and TISA (Regulation DD). This was accomplished by:

  • Taking advantage of the lack of understanding of options and interest rates among account holders
  • Engaging in false representation
  • Misrepresenting the 360 Savings rate
  • Using misleading advertising

The suit looks to recover monetary relief from Capital One. This is made available to the victims through the Civil Penalty Fund, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The CFPB is also seeking to enjoin Capital One from committing further violations and any other injunctive relief the court may order. The CFPB stands as a watchdog against financial institutions taking advantage of consumers. Capital One may discover if their bite is worse than their bark.

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