US-based bank Capital One is facing legal proceedings from the US Consumer Financial Protection Bureau (CFPB) for ‘cheating’ consumers of more than $2bn in interest payments on savings accounts.
The lawsuit said the bank allegedly misled holders of its “360 Savings” account, which was promoted as offering one of the nation’s “highest” interest rates.
Go deeper with GlobalData
However, the bank was found freezing the interest rate at a low level while rates elsewhere increased.
Concurrently, Capital One introduced a new product, “360 Performance Savings,” which was nearly identical but offered significantly higher interest rates, at times over 14 times that of the 360 Savings rate.
The CFPB’s lawsuit asserts that Capital One failed to adequately inform 360 Savings account holders about the more profitable “360 Performance Savings” account. This lack of transparency is said to have resulted in millions of consumers losing out on over $2bn in interest payments.
The CFPB contends that Capital One deliberately kept 360 Savings account holders in lower-yielding accounts by not disclosing the existence of the higher-rate 360 Performance Savings account.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe watchdog alleges that Capital One engaged in deceptive practices, such as using similar names and marketing for both products, removing references to the 360 Savings account from its website, and excluding 360 Savings holders from marketing campaigns for the new product.
The bank has also been accused of instructing employees not to proactively inform 360 Savings customers about the 360 Performance Savings account.
The lawsuit aims to halt these alleged unlawful practices, secure compensation for affected consumers, and impose penalties to be contributed to the CFPB’s victims relief fund.
Capital One, with assets exceeding $480bn, is a subsidiary of Capital One Financial. The bank offers a variety of deposit account products.
In 2012, Capital One acquired ING Direct USA and its high-interest online savings account product, which was rebranded as “360 Savings” in 2013.
CFPB director Rohit Chopra said: “The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts. Banks should not be baiting people with promises they can’t live up to.”
