If you are someone who opened a Capital one 360 account before or after September 2019, then here is a good news for you. If reports to be believed by Yahoo Finance, the Capital One Bank has agreed to pay $425 million to its users. They have agreed to pay this amount to settle a major class-action lawsuit which accused the bank of misleading the depositors. They did so by quietly giving higher interest rates on new savings accounts while keeping old customers locked into low-yielding items. All the customers accuse the bank of not informing of the better rates available through new accounts. The preliminary settlement was filed in the US federal court in Alexandria, Virginia on Friday. Now it awaits judicial approval before it becomes official.
What is Capital One $425M settlement?
The lawsuit claim that customers who were holding 360 savings accounts in the bank were not informed of the newer & higher interest rates. To scam people they started a new account by the name of 360 Performance Saving Account which offered higher interest schemes. But the long-time customers were not informed about this new option. They were also not informed about that the interest rates of their accounts have increased. As per reports from Consumer Financial Protection Bureau (CFPB) this policy by bank ultimately resulted in blocking more than $2 billion in user savings.
Disparities Between 360 Performance Accounts & 360 Savings Accounts
The lawsuit is basically based on Capital One Bank’s management and marketing of it’s 360 performance saving & 360 savings accounts. As per plaintiffs 360 savings accounts were fixed at 0.3%, whilst 360 performance savings accounts were fixed at 4.35% by the bank in early 2024. They did so without informing existing depositors that they could switch. Depositors complained that they were not informed about the option of switching to higher yielding accounts.
The higher-rate account now pays 3.6%, which is a big difference from the 0.3% that older clients are getting. The plaintiffs said that Capital One’s omission to tell clients about the higher-rate option cost them a lot of interest over the course of several years.
How Will The Capital One $425 Settlement Fund be Distributed?
They say out of total approx $300 million will go to those depositors who lost the opportunity to get higher interest. The amount will be decided on the basis of when and for how long one held the account. Remaining $125 million will be given to those account holders whose accounts are still active. Now, the interest on their accounts will be double the national average. In just few steps you can make this claim & then get your money back, only if you are an old customer of Capital One & have used the 360 Savings account.
Costs of attorneys and related legal costs will be taken from the settlement pool. The bank has not acknowledged to any wrongdoing, but it agreed to the financial conditions to settle the lawsuit & also avoid a long legal battle.
Eligible Candidates for Capital One $425 Settlement Fund
The amount or settlement fund will be given to both new and old users who have had a 360 Savings account in Capital One bank at some point between 18 September 2019 and the date court approves the settlement finally.
Bigger Picture of the Law and Regulations
This issue comes at a time when there is more & more interest or hope in how banks talk to customers about interest rates. In January 2025, the U.S. Consumer Financial Protection Bureau (CFPB) launched a similar action against Capital One Bank but later dropped it. However, the Trump administration started to cut back on the agency’s enforcement efforts in February. This all resulted in the case being abandoned.
On Wednesday, New York Attorney General Letitia James filed a lawsuit on behalf of Capital One depositors in that state. It was filed in the state of Virginia. The case made identical charges of dishonest & wrong behavior. The bank has refuted the claims as well as plans to fight the state lawsuit in the court of New York.
Perfect Timing of The Settlement
As we see the timing of the settlement is especially noteworthy. You know why? Because Capital One just finished purchasing Discover Financial Services. The merger has garnered a lot of attention as it has a potential to change the US consumer banking & credit card face. Some experts think that resolving the class action lawsuit just before the full integration of Discover may have been a strategic move. This is done to streamline Capital One’s regulatory standing & eliminate reputational risks. There is news that the Capital One bank’s $35.3 billion acquisition of Discover is told to be closed on 18th May. The bank stays focused on broader strategic growth rather than ongoing legal battle.
What Should Be Done By Depositors Now?
If you are eligible for Capital One $425 million settlement then you need to follow these steps:
1. Keep a watch on your mail as Capital One bank or the administrator of the settlement will contact the eligible depositors once the settlement is approved by the court.
2. To check updates, forms and latest news or timelines visit their official settlement website.
3. Please consider switching to a 360 Personal Saving account if you are still holding a 360 Savings account and need high-yield alternative.
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