New York Attorney General Letitia James filed a lawsuit against Capital One on Tuesday, accusing the banking giant of deceiving customers into earning significantly less interest on their savings than advertised.
The lawsuit alleges Capital One created a two-tier system of savings accounts—one with low interest for existing customers, and another, high-yield version offered quietly to new or in-the-know users—without notifying many customers of the difference. The alleged scheme cost New Yorkers millions of dollars in lost interest earnings over several years.
Millions lost through a hidden two-tier system
According to the lawsuit, Capital One marketed its “360 Savings” account as a high-interest option with “one of the nation’s best savings rates.” However, beginning in 2019, the bank introduced a new account, “360 Performance Savings,” that offered significantly higher rates—as much as 14 times higher at its peak.
While nationwide interest rates rose, Capital One kept the 360 Savings account rate frozen at 0.3%, while the Performance account climbed to 4.35%. Despite the stark difference, the bank did not notify existing 360 Savings customers of the better option. Internal guidance even instructed employees not to mention the higher-interest account unless customers specifically asked.
The result: customers unknowingly left money on the table. For example, a $10,000 deposit in a 360 Savings account starting in 2019 would have earned only $186 over five years. The same amount in a 360 Performance Savings account would have generated $1,090.
Lawsuit seeks restitution, damages, and penalties
Attorney General James said the bank’s marketing was misleading and violated state and federal consumer protection laws. The suit seeks:
- Restitution for affected customers
- Disgorgement of profits Capital One gained through the scheme
- Financial penalties
“Capital One assured high returns with no catches, then pulled the rug out from under their customers,” said James. “Big banks are not allowed to cheat their customers with false advertising and misleading promises.”
The lawsuit comes after the federal Consumer Financial Protection Bureau dropped a similar case earlier this year following a change in leadership. James said her office is stepping in to ensure accountability.
What’s next for Capital One customers?
The Attorney General’s Office is pursuing restitution for New York residents who held 360 Savings accounts and were not informed of the better-performing product. Customers can follow updates or file complaints through the Attorney General’s website at ag.ny.gov.
This matter is being handled by the Consumer Frauds and Protection Bureau within the Office of Economic Justice.
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