# Capital One (COF) Seeks to Quash Savings Account Holder Lawsuit
Capital One Financial Corporation (COF) is in the midst of a legal battle as it endeavors to dismiss a lawsuit brought against it by savers. The savers allege that COF engaged in deceptive tactics to create an illusion that they were receiving the highest interest rate available from its online banking arm amidst a soaring interest rate environment.
In a recent lawsuit, savers asserted that COF misleadingly and dishonestly introduced a new high-yield account instead of boosting the rates on its 360 Savings account. The lawsuit claims that, against the backdrop of a high-interest-rate environment, COF necessitated its existing 360 Savings account customers, who were in pursuit of better yields, to open a 360 Performance Savings account.
According to the lawsuit, Capital One’s actions resulted in its 360 Savings account holders collectively losing millions of dollars in interest since September 2019, particularly as interest rates began surging rapidly in March 2022. The claim further highlights that in September 2019, the 360 Savings account holders were receiving a 1% interest rate from Capital One, but the bank subsequently removed references to 360 Savings from its website and commenced advertising a new account known as 360 Performance Savings, which was offering a 1.90% interest rate at that time.
The accusers’ lawyers stated, “There were, and are, no material differences between these two accounts other than the interest rate. Capital One did not notify its 360 Savings account holders that the 360 Performance Savings account was available, that 360 Performance Savings was, in fact, a different account and not just another name for the 360 Savings account, or that 360 Performance Savings paid a higher rate of interest.”
As the Federal Reserve commenced hiking rates, the gap between the 360 Savings account rate and the rate offered to 360 Performance Savings customers quickly widened. Consequently, customers with 360 Performance Savings accounts were earning 4.30%, while those with 360 Savings accounts were only receiving 0.30% by the last month.
The plaintiffs contend that the bank breached its contract with 360 Savings account customers. They argue that although COF had the authority to set the interest rate, it failed to do so in good faith and fair dealing.
However, COF is now seeking the dismissal of the lawsuit. In a court filing, Capital One emphasized that the annual percentage yield on its 360 Savings account was clearly disclosed to customers in monthly statements and highlighted the contractual language stating its right to unilaterally change interest rates at any time.
The company argues that the plaintiffs are demanding the establishment of a legal obligation that would mandate any bank offering a new product to provide it to existing customers enrolled in a different product. COF stated, “Plaintiffs’ request is legally unsupported, could have far-reaching and untenable consequences if granted by this Court, and should be rejected outright.”
COF asserts that the accusers are attempting to leverage state law in a manner that could substantially interfere with the company’s ability to receive deposits, a power granted federally. The bank has also underscored that the plaintiffs did not identify any contractual provision requiring it to notify 360 Savings customers about the creation or existence of the 360 Performance Savings account.
“Nor do they allege any facts showing that Capital One did anything to prevent them from learning about, or switching to, the Performance Savings account. On the contrary, they allege that Capital One advertised the Performance Savings account on its website,” COF asserted.
Over the past six months, COF’s shares have surged 20.1% compared with the financial-industry’s growth of 2.2%.
## Misconduct by Other Companies
In a related context, Goldman Sachs (GS) recently agreed to pay $6 million to the Securities and Exchange Commission (SEC) for inadequate and inaccurate blue sheet submissions, which contain crucial information about securities trading and transactions provided to regulatory authorities. The SEC found over 22,000 deficient blue sheet submissions by GS between 2012 and 2022, comprising 43 different types of errors affecting over 163 million transactions. GS admitted to the inadequacies and has committed to enhancing its reporting systems and controls.
Similarly, Washington Trust Bancorp, Inc.’s (WASH) subsidiary, The Washington Trust Company, reached a settlement with the U.S. Department of Justice to address allegations of violating fair lending laws in Rhode Island between 2016 and 2021. As part of the settlement, Washington Trust is obligated to provide $7 million in mortgage loan subsidies for specific census tracts and allocate $2 million for targeted community outreach and marketing efforts, with no civil monetary penalties included.
In conclusion, despite the legal contentions and financial missteps, it’s essential for investors to remain vigilant and informed about such developments to navigate the dynamic landscape of the financial sector effectively.
For additional information related to the COF lawsuit and other industry insights, please visit [Zacks Investment Research](https://www.zacks.com/).
