Capital One customers in New York will receive millions of dollars after a new settlement over misleading savings account practices.
Attorney General Letitia James announced a revised settlement that will require Capital One to pay $425 million in restitution nationwide to customers who were shortchanged on interest payments. An estimated $34 million of that total will go to New Yorkers who held Capital One 360 Savings accounts.
James sued Capital One last year, alleging the bank misled customers by advertising its 360 Savings accounts as “high interest” while quietly keeping rates low as national interest rates rose beginning in 2022.
Instead of raising rates for existing customers, Capital One introduced a nearly identical product called 360 Performance Savings that offered much higher interest rates. At one point, the newer accounts paid more than 14 times the interest of the original 360 Savings accounts.
“Capital One customers were counting on growing their savings accounts, but their bank misled them and cheated them out of valuable interest payments for years,” James said.
An earlier class action settlement would have paid less than $300 million and allowed Capital One to continue paying lower rates to 360 Savings customers. James led a bipartisan coalition of attorneys general in opposing that deal, and the court rejected it.
Under the new settlement, Capital One must not only pay restitution but also eliminate the two-tier system by matching interest rates between its 360 Savings and 360 Performance Savings accounts. State officials estimate that change will provide an additional $530 million in future interest payments to customers nationwide.
The settlement has received preliminary court approval. The attorney general’s office said it will dismiss its lawsuit if the agreement receives final approval and goes into effect.
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