Capital One Agrees to $425 Million Settlement in Savings Account Interest Rate Case
By Jonathan Stempel
(Reuters) – Capital One has reached a $425 million settlement in a nationwide lawsuit alleging that the bank misled savings account depositors by not disclosing the option to transfer their funds to higher-yielding accounts.
A notice outlining the preliminary agreement was submitted on Friday in U.S. federal court in Alexandria, Virginia, pending judicial approval.
According to depositors, Capital One advertised competitive interest rates on its 360 Savings accounts while quietly offering better rates to new customers on the 360 Performance Savings accounts.
The lawsuit claims that Capital One maintained the 360 Savings account rates at 0.3% while offering rates as high as 4.35% on the 360 Performance Savings accounts, which currently yield 3.6%.
As part of the settlement, Capital One will compensate 360 Savings depositors with $300 million to cover the potential interest they could have earned on the higher-yielding accounts. An additional $125 million will be allocated to depositors who still hold 360 Savings accounts.
The settlement applies to depositors who held 360 Savings accounts since September 18, 2019, with legal fees to be covered by the settlement funds.
Capital One, headquartered in McLean, Virginia, did not admit any wrongdoing in agreeing to the settlement and has not commented on the matter.
Earlier this year, the U.S. Consumer Financial Protection Bureau filed a similar lawsuit against Capital One, which was later dropped. New York Attorney General Letitia James also filed a lawsuit on behalf of 360 Savings depositors in the state.
Capital One is set to finalize its acquisition of Discover Financial Services on May 18, valued at $35.3 billion.
The case is known as In re Capital One 360 Savings Account Interest Rate Litigation and is under review in the U.S. District Court for the Eastern District of Virginia (No. 24-md-03111).
(Reporting by Jonathan Stempel in New York; Additional reporting by Nate Raymond; Editing by Chizu Nomiyama and Will Dunham)
