The Consumer Financial Protection Bureau (CFPB) has filed a $2 billion lawsuit against Capital One, alleging that the bank deceived millions of consumers with their savings account offerings. The federal watchdog’s allegations paint a picture of a calculated scheme that goes far beyond typical bank marketing tactics.
The CFPB claims that Capital One used two similarly named products, 360 Savings and 360 Performance Savings, to create a two-tier system where existing savings account customers were purposely given a dramatically lower interest rate than one marketed to new customers.
By actively keeping 360 Savings customers in the dark about the much higher rates offered by the 360 Performance Savings account, the agency alleges that the bank attracted new customers without paying existing depositors the interest they were promised.
Capital One vigorously rejects the CFPB’s claims. In a statement to Fortune, a Capital One representative wrote, “We strongly disagree with their claims and will vigorously defend ourselves in court.” Regarding its products, the statement said that, “Our flagship 360 Performance Savings product was marketed widely, including on national television, with the simplest and most transparent terms in the industry.”
Here’s the truth: Deceptive marketing can be hard to spot
As someone who has written about financial products for over a decade, I like to think of myself as immune to common errors regular consumers can make. But the truth of the matter is that the CFPB lawsuit exposed a doozy of a mistake I made with my own Capital One savings account.
Here’s what I did to fix it and what you need to do to make sure you aren’t losing hundreds of dollars in interest that you rightfully should be earning, not only from Capital One but from all of your savings accounts.
As a longtime Capital One customer who has both checking and savings accounts with the bank, my accounts are all linked so I can easily move money between the two. Like most people, the two accounts were mostly on autopilot—I wasn’t paying attention to the savings account’s annual percentage yield (APY).
So imagine my surprise when I logged into my Capital One account after reading about the lawsuit and realized that I was one of the customers earning a token interest rate instead of the one 360 Performance Savings account holders get.
In my case, it was the difference between earning 0.1% APY and 3.8% APY. If I had saved $10,000 in the account, this would have amounted to a difference of $370 a year in interest income.
What Capital One savings account customers need to know
If you’re a Capital One savings account holder, here’s what you need to know.
Check your savings account
First and foremost, determine which type of Capital One savings account you have. The lawsuit primarily concerns two accounts, the 360 Savings Account and the 360 Performance Savings Account.
The CFPB alleges that Capital One kept interest rates low on 360 Savings accounts while offering significantly higher rates on the newer 360 Performance Savings accounts without adequately informing existing customers.
Review your savings APY
To find your current rate:
- Log into your Capital One online banking portal
- Navigate to your savings account details
- Look for the interest rate or APY information
- Compare APY of your existing account to the other accounts offered by Capital One to make sure you are in the best offering for your financial goals.
Consider switching accounts
If you have a 360 Savings account with a lower interest rate, you may want to consider switching to a 360 Performance Savings account—or another high-yield savings account. Here’s how:
- Log into your Capital One online banking
- Select “Open a New Account”
- Choose “360 Performance Savings”
- Follow the prompts to open the new account
- Transfer funds from your old account to the new one
After reviewing my interest rates and realizing the huge difference between my rate and the best rate offered, I moved my savings into a new 360 Performance Savings account. Moving the money took less than five minutes and the new account shows up next to my existing one on my homepage so there’s no new login or password to remember.
Remember, you’re not obligated to stay with Capital One. Shop around and compare rates from other banks and credit unions to ensure you’re getting the best deal for your savings.
Monitor your account
Keep a close eye on your Capital One savings account in the coming months. The bank may make changes in response to the lawsuit, potentially including automatic account upgrades or interest rate adjustments.
Stay informed
Follow reputable financial news sources for updates on the lawsuit and any actions Capital One takes in response. The CFPB’s website (consumerfinance.gov) is also a valuable resource for official information and consumer guidance.
Know your rights
As a consumer, you have the right to clear and accurate information about your financial products. If you believe you’ve been misled or treated unfairly by Capital One, the first step is to contact Capital One to discuss your concerns. If you do not receive a satisfactory response, you can file a complaint with the CFPB at consumerfinance.gov/complaint.
Be wary of scams
In the wake of high-profile lawsuits, scammers often try to take advantage of confused consumers. Be cautious of unsolicited calls, emails, or messages claiming to be from Capital One or the CFPB. Always verify the authenticity of any communication before providing personal or financial information.
Prepare for potential compensation
If the CFPB’s lawsuit is successful, affected consumers may be eligible for compensation. While it’s too early to know the outcome, keep records of your Capital One savings accounts, including:
- Account statements
- Interest rate notifications
- Any communication with Capital One about your accounts
These documents could be helpful if you need to file a claim in the future.
The takeaway: Keep a close eye on your money
Capital One widely advertises its 360 Performance Savings account, but when I log into my Capital One account home page, there’s a link where I can “explore other products” but not a description of what those products are. There is a link where I can check my savings account rate, but not one that explains that much higher rates are available.
The CFPB alleges that Capital One hides information on higher rates from existing customers. I’m not sure this is true, but it’s safe to say the bank doesn’t make it easy or intuitive for current customers to get the best deal. I’m embarrassed to have made this kind of a mistake, but it’s an easy mistake to make.
As a current Capital One customer who also has an understanding of the costs of customer acquisition in banking, I am frankly perplexed as to the shortsightedness of a bank not making sure current customers were being treated as well—or frankly better than—new customers.
This lawsuit serves as a reminder of the importance of actively managing your finances. Regularly review your bank accounts, compare interest rates, and don’t hesitate to switch financial products if better options are available.
