New York Attorney General Letitia James on Monday sued Capital One N.A. and Capital One Financial Corporation for cheating its online savings account customers out of millions of dollars in interest payments.
The lawsuit alleges that Capital One marketed its 360 Savings accounts as high interest accounts with “one of the nation’s best savings rates” that would earn its customers more than an average savings account. In reality, while interest rates rose nationwide, Capital One kept the interest rates for its 360 Savings accounts artificially low, according to a press release of the suit.
Instead, Capital One created 360 Performance Savings, a nearly identical type of savings account that provided much higher interest rates than 360 Savings – at one point, more than 14 times higher. Capital One intentionally misled its 360 Savings customers about the existence of its 360 Performance Savings product to avoid paying them millions of dollars in interest, James said.
“Capital One assured high returns with no catches, then pulled the rug out from under their customers and hoped nobody would notice," James said. "Big banks are not allowed to cheat their customers with false advertising and misleading promises."
With compound interest, even a small difference in rates adds up over time to create large differences in savings, meaning customers who stayed in 360 Savings accounts lost out on significant interest payments. A customer who put $10,000 in a 360 Savings account in September 2019 would have earned $186 of interest after five years. If the same customer had switched to a 360 Performance Savings account, they would have earned $1,090 of interest over the same period.
This suit comes months after the Trump administration’s Consumer Financial Protection Bureau dropped a similar suit against the financial institution.
