Capital One Faces Potential Enforcement Action over Savings Account Disclosures: Report

2024-11-06 11:41:42 Primitive Reading

From financemagnates

Capital One could face enforcement action from the Consumer Financial Protection Bureau (CFPB) over alleged misrepresentations related to its savings accounts, the SEC filings showed.

This development followed customer complaints that the bank's introduction of a new high-interest account was unclear, leaving some customers with lower earnings than they might have otherwise received.

Customer Lawsuit

In the ongoing dispute, some of Capital One's customers claim that the bank introduced a “360 Performance Savings” account offering higher interest than their existing “360 Savings” accounts without properly informing them of the discrepancy.

According to a lawsuit filed last year, this lack of transparency allegedly led to lost earnings for many who stayed with the lower-rate option. Customers argue that the bank's communication about the new account was inadequate. However, the Wall Street banking giant maintains that it had clearly posted the information online and retained the contractual right to change interest rates at its discretion, Reuters reported.

Earlier this month, Capital One reportedly received a letter from the CFPB warning of possible enforcement action related to the case. The agency is exploring whether to initiate litigation against the bank. Capital One has responded by filing a motion to dismiss the original lawsuit.

Acquisition Plans

This comes as Capital One awaits regulatory approvals for the proposed $35.3 billion purchase of Discover Financial Services. The deal has already attracted attention from New York Attorney General Letitia James, who announced an investigation last week into whether the acquisition violates state antitrust laws.

If the acquisition goes through, Capital One pledged $265 billion over five years for community lending, philanthropy, and investment, a move that could help ease regulatory concerns. If the CFPB proceeds with enforcement action or litigation, it could prompt increased scrutiny of how banks communicate rate changes and other account features to customers.

Earlier this year, Capital One Financial disclosed its decision to buy Discover for $35.3 billion in an all-stock agreement. The deal, which involves the financial services company, brings together two of America’s largest credit card companies.

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