Capital One Settles Class-Action Lawsuit for $425 Million

Capital One has settled a class-action lawsuit for $425 million, following allegations that the bank had been concealing two comparable savings accounts with different interest rates, resulting in clients losing $2 billion in interest over seven years. The settlement comes after the bank was sued by the Consumer Financial Protection Bureau (CFPB) and the New York Attorney General's office, among others. The lawsuit claimed that Capital One failed to notify legacy account holders of rate increases and account adjustments, and also "scrubbed" references to 360 Savings from their website.

Key Takeaways:

• Capital One has settled a class-action lawsuit for $425 million, following allegations of concealing two comparable savings accounts with different interest rates.
• Clients are estimated to have lost $2 billion in interest over seven years due to the bank's actions.
• The settlement will see Capital One refund $300 million to late interest payers, with long-term 360 Savings depositors gaining more than beginners.
• Capital One will also provide its initial 360 Savings account customers with $125 million in interest.
• National savings interest rates should double after the settlement, with the national average expected to increase to 0.84%.
• The settlement amounts to about 21% of the estimated $2 billion in interest lost by clients.
• New York Attorney General Letitia James has stated that her office may continue to pursue statutory claims against Capital One.

Statistics:

• $425 million: the amount of the Capital One settlement.
• $2 billion: the estimated amount of interest lost by clients over seven years.
• 21%: the percentage of the estimated $2 billion in interest lost by clients that the settlement covers.
• 0.42%: the national average savings interest rate as of May 19.
• 0.84%: the expected national average savings interest rate after the settlement.
• $300 million: the amount refundable to late interest payers.
• $125 million: the amount refundable to Capital One's initial 360 Savings account customers.

Sources:

• A January CFPB study cited in the article, stating that clients lost $2 billion in interest over seven years.
• A May article by New York Attorney General Letitia James' office, mentioning the lawsuit against Capital One.
• A University of Wyoming College of Law banking law specialist, Julie A. Hill, quoted in the article.
• Greenberg Glusker commercial and corporate litigation lawyer, Ira M. Steinberg, quoted in the article.