New York Attorney General Letitia James has sued Capital One (NASDAQ:COF), alleging the company misled consumers about its 360 Savings Account and interest rates.
Capital One dodged a similar suit brought by the Consumer Financial Protection Bureau (CFPB), which was dismissed this past spring.
The CFPB initiated the action just before the Trump administration took over. The CFPB claimed that Capital One had deprived millions of consumers of over $2 billion in savings account interest by keeping rates low on its 360 Savings accounts while not adequately disclosing a higher-yielding alternative, the 360 Performance Savings account.
In a release, the NY AG said, “Capital One assured high returns with no catches, then pulled the rug out from under their customers and hoped nobody would notice.”
“Big banks are not allowed to cheat their customers with false advertising and misleading promises. I will always fight to protect New Yorkers’ wallets and prevent banks from ripping off consumers to boost their own bottom lines.”
James noted that at one point, the better account paid more than 14X more in interest than the lesser account.
The AG states that while Capital One promoted its 360 Performance Savings accounts to existing customers, it did not notify its 360 Savings customers of the better option. Allegedly, Capital One instructed its employees not to tell 360 Savings customers about the new product unless they explicitly asked.
James alleges that Capital One’s actions violate state and federal law by misleading customers. James states she does not want Capital One to escape accountability.
Shares in Capital One declined almost 2% today.