What's Happening?
Capital One has reached a $425 million settlement in a class action lawsuit concerning its 360 Savings account. The lawsuit, filed by customers, alleged that Capital One froze the interest rate on the account at a low level despite rising national rates, resulting in over $2 billion in lost interest payments. The Consumer Financial Protection Bureau (CFPB) had also sued Capital One, accusing the company of misleading consumers by marketing the account as 'high interest.' Although the CFPB dropped its lawsuit, Capital One agreed to the settlement, which will compensate affected customers.
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Why It's Important?
The settlement is significant as it addresses consumer protection issues related to misleading financial product marketing. It highlights the importance of transparency in interest rate offerings and the need for financial institutions to accurately represent their products. The case underscores the role of regulatory bodies like the CFPB in safeguarding consumer interests and ensuring fair practices in the banking industry. The settlement also serves as a reminder for consumers to stay informed about changes in their financial accounts and seek redress when misled.
What's Next?
The settlement awaits court approval, with a hearing scheduled for November 6. Customers who held a Capital One 360 Savings account between September 2019 and June 2025 are eligible for compensation. They will receive payments equivalent to what they would have earned if their accounts had paid the interest rate applicable to the newer 360 Performance Savings account. The settlement also stipulates that current account holders will earn an interest rate at least twice the national average rate for savings deposit accounts.
