Capital One has agreed to pay $425 million to settle a major class-action lawsuit that accused the bank of misleading depositors about interest rates on their savings accounts. The proposed settlement, filed in the U.S. District Court for the Eastern District of Virginia, is pending final approval from a federal judge.
The lawsuits, which were consolidated from multiple states, claim that Capital One offered a low-yield “360 Savings” account at 0.3% interest, while failing to adequately market or inform customers about its far higher-yield “360 Performance Savings” account, which at times offered over 4% interest.
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The Core Allegation: Misleading Customers on Interest Rates
Customers Were Allegedly Left in the Dark
According to the lawsuits, Capital One created confusion by continuing to promote the 360 Savings account while offering a far more competitive rate through its Performance Savings account. Plaintiffs claim they were led to believe they were earning a competitive rate, when in fact they were missing out on substantially higher returns.
The legal filings argue that Capital One failed to advertise the higher-yielding accounts, effectively leaving many long-time customers stuck with the lower rate—costing them hundreds or even thousands of dollars in lost interest over time.
Key Settlement Details: Who Gets What
$300 Million in Back Interest to Be Paid Out
Under the proposed agreement:
- $300 million will go directly to affected depositors to compensate for the interest they could have earned had they been placed in the higher-yield account.
- The remaining $125 million will be distributed as additional interest payments to current holders of 360 Savings accounts.
- Legal fees and other administrative costs will be paid out of the total settlement fund.
No Admission of Wrongdoing
As part of the deal, Capital One did not admit to any wrongdoing. The bank has not commented on the settlement, nor have attorneys for the plaintiffs responded to press inquiries as of the latest filings.
Ongoing Legal Action in New York and Beyond
New York AG Files Separate Lawsuit
Despite the large-scale settlement, Capital One continues to face additional legal challenges. On Wednesday, New York Attorney General Letitia James filed a separate lawsuit on behalf of depositors in her state, accusing the bank of failing to notify customers that better interest rate options were available.
“Capital One assured high returns with no catches, then pulled the rug out from under their customers,” said AG James. “Big banks are not allowed to cheat their customers with false advertising and misleading promises.”
This new lawsuit is not part of the federal settlement filed in Virginia.
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Regulatory Attention: CFPB Joins the Fray
The Consumer Financial Protection Bureau (CFPB) also previously sued Capital One, alleging the bank had cheated depositors out of over $2 billion in interest payments. That case, however, was dropped under the Trump administration and has not been revived since.
What Happens Next?
With a judge’s approval still pending, depositors affected by the settlement may soon be eligible for payouts. The case serves as a high-profile reminder of the importance of transparency in financial services, especially when it comes to consumer banking and interest-bearing accounts.