Capital One used a deceptive scheme to cheat its customers out of $2 billion across several years, a federal watchdog claimed Tuesday in a lawsuit.
The scheme concerned the company’s “360 Savings” accounts, which were marketed as a high-interest product. However, Capital One later introduced the “360 Performance Savings” option, a similar account.
While the 360 Performance Savings account offered interest rates up to 4.35% between 2020 and 2024, the interest rates for the basic 360 Savings accounts were stuck at 0.30% the entire time, according to the Consumer Finance Protection Bureau.
Capital One deceived customers by presenting the account options as nearly identical, and it took steps to hide the benefits of 360 Performance Savings accounts from 360 Savings customers, the CFPB said.
“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra said in a statement. “Banks should not be baiting people with promises they can’t live up to.”
While banks are typically allowed to charge any interest rate that customers will tolerate, Capital One broke the law by deliberately confusing its customers, according to the CFPB. The bank also instructed employees not to tell 360 Savings customers about the 360 Performance Savings option, investigators said.
Capital One has denied any wrongdoing in the case. The bank claimed its products have “always been available in just minutes to all new and existing customers without any of the usual industry restrictions.”
The CFPB — created in 2011 after the late 2000s financial crisis — has been controversial since its inception and recently filed several legal actions shortly before President Biden leaves office.