Bo Tefu and Antonio Ray Harvey | California Black Media
California Attorney General Rob Bonta helped secure a $425 million settlement with Capital One that would provide restitution and improved interest rates for customers who were allegedly misled about their savings accounts, state officials announced Jan. 13.
The settlement, which received preliminary court approval last week, resolves claims that Capital One unfairly kept interest rates artificially low for holders of its 360 Savings accounts while offering significantly higher rates through a nearly identical product. If finalized, the agreement will require Capital One to pay $425 million in restitution and eliminate what regulators described as a misleading two-tiered savings system.
Bonta joined a bipartisan coalition of attorneys general last year in opposing an earlier proposed class action settlement that state officials said failed to adequately compensate consumers. The revised agreement more than doubles the value of that initial proposal and grants multiple states enforcement authority.
“Capital One misled consumers through false marketing and a lack of transparency regarding its savings account system, cheating consumers nationwide,” said Bonta. He added that the earlier proposal was “unacceptable and hopelessly inadequate,” saying California consumers “deserve a fair deal and someone fighting in their corner.”
According to state officials, Capital One marketed its 360 Savings accounts as “high interest” products that would outperform average savings accounts. However, while interest rates rose nationwide beginning in 2022, the bank kept rates on those accounts low. At the same time, it introduced 360 Performance Savings accounts that offered much higher interest rates, at one point more than 14 times higher than the original product.
Regulators said the practice allowed Capital One to save nearly $3 billion in interest payments. Under the new settlement, the bank must align interest rates between the two savings products, ending the two-tier structure. The agreement is expected to deliver an estimated $530 million in additional future interest to consumers nationwide.
The settlement also resolves related claims brought by attorneys general in California, Maryland, Massachusetts, Minnesota, Nevada, New York, Ohio, and Rhode Island. The resolution prohibits Capital One from making false or deceptive statements about interest rates on deposit accounts and allows states to enforce consumer relief provisions.
Bonta credited New York Attorney General Letitia James for leading the multistate effort and said the outcome highlights the importance of state enforcement actions, particularly after the Consumer Financial Protection Bureau dismissed a related case.
Final approval of the settlement will be determined by the court at a later date. If approved, the agreement would mark one of the largest consumer restitution settlements involving savings account interest practices.
