Capital One to Pay $425m Over False Savings Account Interest Claims

Capital One has agreed to pay $425 million to settle nationwide litigation over how it advertised interest rates to savings account holders.

The lawsuit claims Capital One denied savings account holders higher interest rates by failing to inform them they could switch to accounts offering better returns.

It argues that Capital One misled customers by advertising high interest rates on its 360 Savings accounts, while quietly offering significantly better rates to new customers through the similarly named 360 Performance Savings accounts.

In particular, the lawsuit cites that Capital One kept 360 Savings account holders locked into a 0.3% rate but offered up to 4.35% on 360 Performance Savings accounts early last year. That rate now stands at 3.6%.

Under the settlement, Capital One will pay $300 million to 360 Savings account holders to cover missed interest they could have earned in 360 Performance Savings accounts. An additional $125 million will go to customers who still hold 360 Savings accounts.

The settlement applies to anyone who held a 360 Savings account at any time since September 18, 2019, and legal fees will be paid from the settlement funds.

Although Capital One denies any wrongdoing, the case has drawn attention from regulators and lawyers. New York Attorney General Letitia James filed a similar lawsuit for residents of the state, which the bank says it will challenge.

The Consumer Financial Protection Bureau also made similar claims but dropped them in early 2021 because of changes in federal enforcement priorities.

This settlement comes as Capital One has completed its $35.3 billion acquisition of Discover Financial Services.