NEW YORK

In a dramatic turn of events, the Consumer Financial Protection Bureau (CFPB) has launched a lawsuit against Capital One, accusing the banking giant of deceiving customers about its high-interest savings accounts and reportedly shortchanging them by a staggering $2 billion in lost interest payments.

The complaint, filed on Tuesday, highlights alleged discrepancies in Capital One's promotion and management of its “360 Savings” accounts. While the bank marketed 360 Savings as one of the country's top options for high interest rates, the CFPB claims that Capital One kept the interest rate frozen at a disappointingly low level for several years, even as national rates saw increases.

Compounding the issue, the CFPB suggests that during this time, Capital One introduced a new product called “360 Performance Savings,” which not only boasted a much higher interest rate but also failed to be adequately communicated to existing 360 Savings customers. The CFPB argues that the bank deliberately obscured the differences between the two products, with employees reportedly prohibited from informing 360 Savings accountholders about the more lucrative 360 Performance Savings option.

This pattern of behavior, according to the CFPB, allowed Capital One to “illegally avoid” paying out vast amounts of interest to millions of customers. In light of these allegations, the CFPB is pushing for civil penalties against Capital One, as well as financial relief for affected consumers.

CFPB Director Rohit Chopra condemned the practice in a statement, asserting, “Banks should not be baiting people with promises they can’t live up to.”

Capital One has responded vigorously, vehemently denying the CFPB's allegations and asserting its intent to defend itself in court. The bank expressed disappointment with the CFPB's timing, noting that these lawsuits coincide with a pending change in administration.

In its defense, Capital One emphasizes that its 360 banking products “offer great rates” and are accessible quickly and easily to all customers without the typical restrictions seen in the industry. A glance at the current interest rates reveals that the 360 Savings account offers a competitive rate of just below 0.50%, while the 360 Performance Savings account stands at about 3.74%. The disparity is striking, with the performance account’s interest rate currently being approximately 7.5 times that of the traditional savings option.

What’s more alarming is the historical context provided by the CFPB: back in July 2024, the interest rate for 360 Performance Savings soared up to more than 14 times that of its 360 Savings counterpart, raising questions about the bank’s transparency and ethical marketing practices.

The lawsuit may send shockwaves through the banking industry, as it draws attention to the importance of clear communication and fair treatment of consumers. As this case unfolds, customers nationwide will be watching closely to see how this legal battle impacts Capital One and potentially reshapes banking practices moving forward.

Stay tuned for more updates on this developing story!