After the CFPB abandoned its investigation, New York AG Letitia James stepped in to tackle Capital One’s alleged deceptive practices. The lawsuit, filed May 14, 2025, claims the bank hid higher interest rates from existing 360 Savings customers while offering new clients substantially better deals through Performance Savings accounts. With potential settlements reaching $425 million, Capital One faces tough questions about transparency. The battle between state prosecutors and big banking continues to unfold.
Deception has a price tag, and for Capital One, it might be $425 million. After the Consumer Financial Protection Bureau mysteriously dropped its January 2025 lawsuit against the banking giant following a leadership change, New York Attorney General Letitia James stepped into the ring. She’s not playing around.
The lawsuit, filed on May 14, 2025, accuses Capital One of pulling a classic bait-and-switch with their 360 Savings accounts. Turns out, they might have been keeping some better interest rates hidden from customers. The bank kept rates for its 360 Savings accounts frozen at 0.3% while offering much higher rates to new customers. The Performance Savings account offered interest rates 14 times higher than the standard account. Fixed rates provide stability but customers were denied this benefit through deceptive practices. Funny how that works – banks being less than forthcoming about ways their customers could earn more money.
Capital One faces allegations of hiding higher interest rates from 360 Savings customers, showing banks’ reluctance to help customers maximize earnings.
Led by Assistant Attorney General Jason E. Meade and the Consumer Frauds and Protection Bureau, the case (1:25-cv-04037) aims to hold Capital One accountable for allegedly violating both state and federal laws regarding interest rate disclosures. The Trump-era CFPB may have backed off, but New York’s top prosecutor isn’t letting this one slide.
Of the potential $425 million settlement being discussed, $300 million would go directly to compensating affected customers. That’s if Capital One decides to play nice and settle. If they choose to duke it out in court, consumers might be waiting years for any restitution – if they get any at all.
Commercial litigation expert Ira M. Steinberg of Greenberg Glusker points out the obvious: if Capital One wins in court, customers get zilch. Zero. Nada. Because you can’t get compensation for wrongdoing if no wrongdoing is legally established. That’s just how the cookie crumbles.
The case is being closely watched by the Division of Economic Justice, with Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy providing oversight.
As settlement discussions continue through June 2025, one thing’s clear: New York’s Attorney General is determined to prove that when the federal watchdog rolls over, state prosecutors can still bare their teeth.
