New York’s Attorney General Letitia James has recently joined that effort, filing a lawsuit against Capital One. She claims the lending institution violated numerous state and federal laws. The lawsuit claims that the bank misled its customers into believing they would earn high interest rates on its savings products. It is particularly aimed at the extremely popular 360 Savings and 360 Performance Savings accounts.
The suit seeks restitution and damages for all affected customers of Capital One’s 360 Savings product, which has been criticized for offering a significantly lower interest rate compared to its counterpart. The 360 Performance Savings account provided strong interest rates, up to 4.35%. The 360 Savings product fell behind, remaining stagnant at just 0.3% even as interest rates began to increase in early 2022. According to the attorney general’s office, New York customers holding the 360 Savings account collectively lost out on millions of dollars in potential interest earnings.
“This lawsuit sends a clear message that big banks are not allowed to cheat their customers with false advertising and misleading promises,” said James. She urged the need to continue to hold financial institutions accountable for their predatory, unfair, and deceptive practices.
The complaint against Capital One is almost identical to an earlier lawsuit by the Consumer Financial Protection Bureau (CFPB). That effort was withdrawn in February, led by then Trump-era Acting Director Russell Vought. This raises questions about regulatory oversight and consumer protection in the banking industry, especially concerning how institutions communicate their product offerings.
In defense of its practices, a Capital One spokesperson stated, “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.” In defense of this response, I imagine the bank would say that it thinks it has met its obligations to be transparent and accessible.
The New York AG’s lawsuit highlights a growing emphasis on equity in the banking industry. Consumers are overwhelmed and confused by the more complex and inscrutable financial products available to consumers today. We know interest rates are in flux right now. That puts a premium on banks to provide relevant and transparent insights that will help consumers take control of their financial lives.
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