Consumers Deserve Justice: Attorney General Bonta Opposes Inadequate Capital One Bank Settlement

Consumers were deceived out of nearly $3 billion, settlement proposes $300 million  

OAKLAND — California Attorney General Rob Bonta today joined a coalition of 18 attorneys general in submitting an amicus brief opposing the approval of a proposed multi-district class action settlement with Capital One Bank on the grounds that the proposed $300 million settlement is not fair, reasonable, or adequate, and significantly less than the $3 billion consumers lost. Further, Capital One is taking the position that final approval of the settlement would prevent attorneys general nationwide from seeking just compensation for victims of the company’s scheme.

“Capital One has misled consumers through false marketing and a lack of transparency regarding its savings account system,” said Attorney General Bonta. “Given an opportunity to make loyal customers whole, Capital One is instead attempting to not only underpay those it has harmed, but maintain the deceptive, anti-consumer practices that prompted this lawsuit to begin with. As the People’s Attorney, I will not allow financial institutions to pull the wool over consumers’ wallets. I support my colleague, New York Attorney General Letitia James, who is taking further action to hold Capital One accountable. Her work must not be undermined by a toothless settlement in this case.”  

The class action alleges Capitol One bank marketed its “360 Savings” accounts as high interest but subsequently released the similarly named new “360 Performance Savings” accounts that offered interest rates as much as 14 times higher without disclosing to existing account holders that they could easily transfer their funds to the new high interest 360 Performance Savings accounts and receive the higher interest rates. This saved Capital One nearly $3 billion in interest. However, the proposed settlement only pays the victims $300 million. The proposed settlement also purports to pay out another $125 million in the form of raised interest rates for holders of old accounts; this payment is misleading, as these consumers would receive far more in interest if they simply switched to the 360 Performance Savings account. 

Worse, the settlement allows Capital One to continue its deceptive practices. 

Despite the hopelessly inadequate payment to its victims, Capital One also asserts that the approval of the settlement will preclude attorneys general from seeking meaningful compensation for the company’s victims. In fact, Capital One argues that a currently pending action by the New York Attorney General would be resolved by this settlement and that the Attorney General cannot achieve proper redress for the company’s victims.

In this amicus brief, Attorney General Bonta joins the attorneys general of New York, Arizona, Colorado, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Ohio, Oregon, Rhode Island, and Washington.  

A copy of the brief can be found here.