Staff Reporter

Capital One Financial Corp. is facing allegations from the Consumer Financial Protection Bureau (CFPB) that it defrauded customers out of $2 billion by misleading them about a savings program that offered higher interest rates. According to the CFPB, the bank kept customers unaware of these better options.

CFPB Director Rohit Chopra stated that the federal government is taking legal action against Capital One, asserting that “banks should not be baiting people with promises they can’t live up to.”

This announcement comes as the Biden administration nears its end, just days before President-elect Donald Trump is set to take office.

The accounts in question were marketed as having the “best” and “highest” interest rates in the country, but they remained stagnant at the lowest levels, even as interest rates increased nationwide, as reported by the Associated Press.

An analyst has indicated that the Consumer Financial Protection Bureau’s (CFPB) recent action against Capital One will not impact the bank’s proposed $35 billion merger with Discover Financial Services, which was announced in February of last year.

This move does not catch Wall Street off guard; Capital One had already warned in October about the possibility of legal action from the government regarding this matter.

The CFPB reported that consumers who enrolled in Capital One’s 360 Savings program, launched in 2013, were led to believe they were accessing one of the highest interest rates available in the country. However, the bank failed to inform these customers about its new 360 Performance Savings product, which offered up to 14 times more interest than the similarly named 360 Savings program.

“Capital One did not specifically notify 360 Savings accountholders about the new product, and instead worked to keep them in the dark about these better-paying accounts,” the CFPB stated.

From 2019 to 2024, Capital One slashed the interest rate on its 360 Savings account to just 0.3% and kept it there. In contrast, the rate on its 360 Performance Savings account surged to 4.35% as of January 2024, following a series of increases from 0.4% in April 2022 to 3.3% in January 2023.