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New York Attorney General Letitia James sued Capital One on Wednesday, alleging the bank launched a savings account product, then concealed certain details from existing customers to avoid paying them a higher interest rate.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, essentially picks up where a dismissed lawsuit brought by the Consumer Financial Protection Bureau left off.
The CFPB sued Capital One in January over the same savings accounts, alleging the bank “cheat[ed] millions of consumers out of more than $2 billion in interest.” But the Trump administration came to power less than a week later and began efforts to drastically downsize the bureau. In doing so, the CFPB asserted a new set of priorities and said it would shift enforcement and supervisory matters to states.
The CFPB voluntarily dropped the Capital One suit in February – one of 18 lawsuits the bureau has dismissed under Acting Director Russ Vought, according to American Banker.
James’ suit “seeks to ensure that Capital One does not escape accountability,” the New York attorney general’s office said in a press release Wednesday. It seeks restitution and damages for affected Capital One customers, as well as a penalty and disgorgement of profits from the bank.
“Capital One assured high returns with no catches, then pulled the rug out from under their customers and hoped nobody would notice,” James said in a statement Wednesday. “Big banks are not allowed to cheat their customers with false advertising and misleading promises. I will always fight to protect New Yorkers’ wallets and prevent banks from ripping off consumers to boost their own bottom lines.”
Capital One, in its own statement Wednesday, said it “strongly disagree[s] with the attorney general's claims and will vigorously defend” itself in court.
At issue are Capital One’s 360 Savings and 360 Performance Savings accounts. Capital One introduced the latter in September 2019, offering higher-interest returns than with the earlier 360 Savings product. However, “instead of encouraging 360 Savings customers to upgrade their existing accounts, Capital One worked to keep them in the dark about the availability of the new product,” James argued.
The bank scrubbed references to 360 Savings from its website but promoted 360 Performance Savings’ rates of return, in a move that James said led 360 Savings customers to believe they were earning more in interest than they were.