CFPB Accuses Capital One of Defrauding Customers Out of $2 Billion

The U.S. Consumer Financial Protection Bureau (CFPB) is accusing banking giant Capital One of duping customers out of more than $2 billion. The agency says Capital One misrepresented the details of its high-interest savings accounts.

According to the complaint filed by the CFPB, Capital One claimed its 360 Savings account had one of the top interest rates in the country. Yet, the bank supposedly avoided paying a substantial amount of interest by not increasing its rate for several years, despite rising rates nationwide. 

Another variation of Capital One’s 360 Savings was a high-yielding “360 Performance Savings” account, which at one time had a rate 14 times higher than the national average. The CFPB alleges the bank purposely did not notify current 360 Savings account holders of the benefits of switching to the Performance account, which denied customers the opportunity to earn a higher rate.

Reportedly, Capital One customer service reps were “proactively” discouraged from explaining the differences between the two types as well. The company also removed references to the older Savings account option, making it seem like there the Performance account was the same thing.

“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” said CFPB Director Rohit Chopra. “Banks should not be baiting people with promises they can’t live up to.”

Capital One Responds to CFPB Lawsuit

Capital One plans to actively fight the CFPB’s complaint. The banking behemoth asserts the agency is strategically filing the last-minute lawsuit just because a new president is about to take office.

 “Our flagship 360 Performance Savings product was marketed widely, including on national television, with the simplest and most transparent terms in the industry,” a Capital One spokesperson claimed, per Banking Dive.

Late last year, Capital One was notified of potential CFPB action related to its savings accounts. The agency’s warning was likely a reaction to a class-action lawsuit filed by Capital One customers alleging a breach of contract. Similar to the CFPB’s recent complaint, the class-action suit claimed Capital One was offering better rates on the new Performance account but failed to alert legacy customers of the new option, causing the loss of millions of dollars.

The CFPB lawsuit is seeking civil penalties as well as monetary relief for Capital One customers affected by the alleged activities. While the CFPB’s action comes just a week before President-elect Donald Trump takes office, experts speculate the litigation will move forward, nonetheless.

At the moment, it’s unclear if the CFPB’s complaint will affect Capital One’s potential merger with Discover. Should the deal actually happen, it would create one of the largest credit card issuers in country.