The New York Attorney General has filed a lawsuit against Capital One, accusing the bank of misleading customers and depriving them of millions of dollars of interest earnings. According to the complaint, Capital One promoted its 360 Savings product as a high-yield savings option, boasting competitive returns.

Yet while national interest rates climbed, Capital One allegedly kept rates for 360 Savings artificially low. Simultaneously, the bank offered a nearly identical product, 360 Performance Savings, with substantially better rates, at times more than 14 times higher.

The lawsuit argues that this quiet bifurcation allowed the bank to profit at the expense of unsuspecting customers who believed they were getting a market-rate return.

“Capital One assured high returns with no catches, then pulled the rug out from under their customers and hoped nobody would notice.”

Letitia James, the Attorney General of the State of New York  

The financial impact of this divergence is far from negligible. A hypothetical $10,000 deposit placed in a 360 Savings account in 2019 would have yielded just $186 in interest over five years, while the same amount in a 360 Performance Savings account would have earned over $1,090.

Multiplied across thousands of customers, the disparity translates into millions of dollars withheld from account holders, funds that Capital One allegedly absorbed to enhance its own financial performance.

“New York families work hard to save money for their futures, and they deserve every dollar of interest they are promised,” said Attorney General James. “Capital One assured high returns with no catches, then pulled the rug out from under their customers and hoped nobody would notice.”

The bank’s failure to transparently migrate or notify customers about more favorable options is the heart of the case, raising broader questions about ethical conduct and disclosure obligations in consumer banking.

What’s the catch?

Following the initial launch of its 360 Savings product, Capital One built a reputation on the promise of “no catches” and above-average returns.

Marketed as a high-interest option with consistent rates and no fine print, it was designed to appear stable, trustworthy and effortless: “a competitive rate you can bank on,” with features that encouraged customers to “put everything on autopilot.”

What customers did not see was the quiet shift that began in September 2019. That month, Capital One rolled out a new product, 360 Performance Savings, structured nearly identically but offering far superior interest rates.

The company halted new openings for 360 Savings accounts and quietly began erasing references to them from its website.

Despite the launch of this improved account, existing 360 Savings users were left in the dark. Capital One did not announce the availability of the new option to them, nor did it provide a pathway to upgrade.

Internal guidance instructed employees not to bring up 360 Performance Savings unless customers asked explicitly.

Even as interest rates across the economy rose sharply beginning in 2022, Capital One kept the 360 Savings rate frozen at 0.30%, while Performance Savings reached as high as 4.35%. On paper, both accounts still appeared to serve the same purpose of offering a simple, fee-free way to grow savings, but the outcomes for depositors diverged drastically.

Capital One exploited consumer inertia – its own survey admitted that nearly half of its customers did not know their savings rate, and most checked their balances less than once a month.

The website, maintained jointly by Capital One, N.A. (CONA) and Capital One Financial Corporation (COFC), played a central role in this strategy. Legacy URLs for 360 Savings were quietly redirected to Performance Savings pages, giving the illusion that no distinction existed.

The near-identical branding and language blurred the line further, disguising the fact that two separate products with wildly different returns were operating simultaneously.

Capital One exploited consumer inertia – its own survey admitted that nearly half of its customers did not know their savings rate, and most checked their balances less than once a month. The company used this behavior to retain low-cost deposits, bolstering its lending base while leaving many customers unaware of the accumulating shortfall.

By the time interest rates surged post-pandemic, the disparity had become stark.

Customers who remained loyal to their original 360 Savings accounts were earning less than the national average. To find out their actual rate, they had to click through hidden icons deep in the online interface.

Those who eventually discovered the rate gap were told they would need to close their accounts and reopen new ones, an unnecessary hurdle for what the lawsuit argues should have been a standard product migration.

As one long-time user noted, “This should’ve been an automatic process.”

The suit now seeks restitution for those who were quietly sidelined, and accountability from a bank that promised transparency, but allegedly built a system that relied on silence.

Legal foundation

Attorney General Letitia James has brought a seven-count lawsuit against CONA and COFC, alleging a coordinated campaign of consumer deception under both New York and federal law.

The first three counts target both CONA and COFC for violating New York’s consumer protection statutes, specifically, General Business Law §§ 349 and 350, which prohibit deceptive business practices and false advertising.

These violations are also framed as repeated illegal and fraudulent conduct under Executive Law § 63(12), which empowers the Attorney General to seek injunctive and equitable relief.

The remaining counts distinguish between the roles of the two entities under federal law.

“Big banks are not allowed to cheat their customers with false advertising and misleading promises.”

Letitia James, the Attorney General of the State of New York 

CONA, as the direct provider of the savings accounts, is charged with violating the Truth in Savings Act and Regulation DD (Count IV) and with offering financial products in breach of the Consumer Financial Protection Act (CFPA) (Count V).

Meanwhile, COFC faces separate claims under the CFPA for engaging in both deceptive (Count VI) and abusive (Count VII) practices, namely, omitting critical information about interest rate disparities and capitalizing on consumers’ limited understanding of financial product terms.

The lawsuit seeks full restitution, civil penalties, and disgorgement of profits, aiming to hold both the bank and its parent accountable for a system designed not only to obscure customer choices but to extract value from consumer inaction.

Where the CFPB left off

New York’s case against Capital One closely mirrors the lawsuit previously filed by the US Consumer Financial Protection Bureau (CFPB) under former Director Rohit Chopra.

In January 2025, just days before the presidential transition, the CFPB accused Capital One of misleading customers and depriving them of over $2 billion in interest. However, in late February, following the return of President Donald Trump and a change in agency leadership, the CFPB voluntarily dismissed the case, along with several other enforcement actions against major financial institutions.

While much of the New York complaint repeats the CFPB’s core arguments and even draws from the same language and data, the CFPB complaint had one notable nuance: the emphasis that Capital One led customers to believe they did not need to actively monitor their interest rate, encouraging them to treat 360 Savings as a long-term, passive product requiring no oversight.

Though the federal case was dropped, the New York action ensures continued accountability.

As Attorney General Letitia James emphasized: “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.”

The lawsuit sends a strong message: even in a regulatory environment prone to reversals, consumer protection cannot be quietly cast aside.

The Capital One lawsuit is part of a broader effort by Attorney General Letitia James to enforce financial and consumer protection laws in New York.

Her office has recently brought similar actions against a range of companies, including crypto platforms such as CoinEx and Celsius for operating without proper registration, payday lenders such as MoneyLion and DailyPay for alleged usurious practices, and Citibank for failing to prevent and reimburse victims of fraud.

These cases reflect a consistent focus on ensuring financial institutions comply with state and federal requirements, particularly when consumer savings or security are at risk.