The logo for consumer lending firm Capital One Financial Corp is seen on its headquarters on January 20, 2023 in McLean, Virginia. The company has reportedly eliminated up to 1,100 technology positions this week as its digital structure matures.
Win Mcnamee | Getty Images News | Getty Images
New York Attorney General Letitia James sued Capital One on Wednesday, accusing the bank of “cheating” customers out of millions of dollars in interest payments – just months after the Trump administration’s Consumer Financial Protection Bureau dropped a similar suit against the financial institution.
In a complaint filed in Manhattan federal court, James alleged that Capital One marketed its “360 Savings” account as its high-yield savings account, then left those customers in the dark by failing to inform them about its new “360 Performance Savings” product that offered substantially higher interest rates.
As interest rates rose starting in 2022, the state attorney general’s office said, Capital One froze the interest rate of its 360 Savings product at 0.3%, while increasing the rate of the 360 Performance Savings accounts to as high as 4.35%, meaning New York 360 Savings customers lost out on “millions of dollars of interest.”
The suit further alleges that Capital One instructed its employees not to tell 360 Savings customers about the new product “unless they explicitly asked.”
The complaint mimics litigation by the CFPB, which was dropped in February under Trump-era CFPB Acting Director Russell Vought. That suit alleged Capital One’s marketing led U.S. customers to miss out on more than $2 billion in interest.
The dropped CFPB case is among a slew of other enforcement lawsuits that the agency pursued under previous CFPB director, Rohit Chopra, and that have been dismissed by President Donald Trump’s administration.
“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.”
A Capital One spokesperson said in a statement to CNBC it strongly disagrees with the attorney general’s claims and will “rigorously defend” itself in court.
“Our flagship 360 Performance Savings product was marketed widely, including on national television, and has always been available in just minutes to all new and existing customers without any of the usual industry restrictions,” the spokesperson said.
The bank also disputed the CFPB allegations earlier this year.
The New York suit accuses Capital One of violating state and federal law and seeks “restitution and damages for all affected Capital One customers.”
