The Consumer Financial Protection Bureau is suing Capital One for allegedly keeping its customers in the dark about its digital product offerings. 

The bureau charged that the $483 billion bank did not communicate the difference between its 360 Savings accounts and its 360 Performance Savings accounts, according to a release from the Consumer Financial Protection Bureau (CFPB) today. The accounts offer different interest rates. 

At one point, the 360 Performance Savings account, which launched in 2019, had an interest rate 14 times higher than the older 360 Savings product, but Capital One did not make consumers aware of the better rates and did not allow its employees to tell customers, the CFPB charged.  

“The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts,” CFPB Director Rohit Chopra said. “Banks should not be baiting people with promises they can’t live up to.” 

The claims cost consumers more than $2 billion in lost interest payments, according to the CFPB. 

Cap One responds 

The CFPB lawsuit is a “recent pattern of filing 11th-hour lawsuits ahead of a change in administration,” a Capital One spokesperson told Bank Automation News. “We strongly disagree with their claims and will vigorously defend ourselves in court.” 

Cap One argues that the new savings account product was “marketed widely, including on national television, with the simplest and most transparent terms in the industry.” The bank is disappointed with the CFPB’s lawsuit, the spokesperson said. 

The latest CFPB lawsuit follows a case filed in December against Early Warning Services, Bank of America, JPMorgan Chase and Wells Fargo.  

Capital One launched the 360 Savings account in 2013 and has been getting complaints ever since, Jim McCarthy, a founding member of the CFPB and chairman at financial advisory group McCarthy Hatch, told BAN. 

McCarthy Hatch provides the top five banks in the United States with AI tools that analyze consumer sentiments through their complaints and urges banks to solve underlying problems rather than fixing complaints and forgetting about them, he said. Capital One is the nation’s ninth-largest bank. 

“A complaint today comes into a bank, and they are focused on resolving that complaint,” McCarthy said. Once the complaint is resolved and if “it’s not a valid complaint, in [the bank’s] minds, the data is never really used in any way.” 

Importance of consumer sentiment 

As the industry moves into an era of open banking, keeping track of consumer sentiment will become more important as banks try to hold onto consumers and avoid scuffles with regulators. 

“The lawsuit is a warning to all consumer financial institutions — do not bait and switch consumers,” McCarthy said.  

The cost of doing this during open banking will be higher than it is today because consumers can switch financial institutions on an impulse, McCarthy said. 

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