Capital One misled customers about their savings account interest rates, "cheating" them out of over $2 billion in interest, the Consumer Financial Protection Bureau alleged in a Tuesday lawsuit.
Why it matters: The agency alleged that millions of customers are affected.
- The CFPB says that Capital One inaccurately represented the variable interest rates for "360 Savings" accounts, which the bank called one of the nation's "top," "best" and "highest."
- The agency also said Capital One intentionally "kept consumers in the dark to maintain a two-tier system." The bank froze the interest rate at a low level while rates rose nationwide, the agency claimed, while creating a "virtually identical product" called 360 Performance Savings. The only difference between 360 Savings and 360 Performance Savings was that the latter paid out substantially more in interest, the CFPB said.
- "Banks should not be baiting people with promises they can't live up to," CFPB director Rohit Chopra said in the statement.
What they're saying: In a statement to Axios, Capital One denied the CFPB's claims.
- "We strongly disagree with their claims and will vigorously defend ourselves in court," a spokesperson said.
- The bank also slammed the agency for pre-empting the start of the Trump administration — historically less CFPB-friendly.
- "We are deeply disappointed to see the CFPB continue its recent pattern of filing eleventh hour lawsuits ahead of a change in administration," the spokesperson said.
What we're watching: How the lawsuit could affect Capital One's attempts to acquire Discover.
- Jaret Seiberg, an analyst for TD Cowen Washington Research Group, said in a note to clients today that the suit is not likely to impact the acquisition, but that the lawsuit might survive inauguration "as Trump 2.0 is more populist than Trump 1.0."
- "Were it to go to trial, we give Capital One the edge as its actions were consistent with customer contracts," Seiberg wrote.
Editor's note: This story has been corrected to reflect that it is Capital One that is trying to acquire Discover (not the other way around).
