Capital One Financial wants a federal judge to dismiss a
In a court filing Thursday, Capital One noted that the annual percentage yield on its "Savings 360" account was disclosed to its customers in monthly statements. The McLean, Virginia-based company also pointed to contractual language stating that it had the right to change interest rates at any time at its own discretion.
Capital One argued that the plaintiffs are seeking the creation of a legal obligation that would require any bank that offers a new product to provide that product to existing customers who are enrolled in a different product.
"Plaintiffs' request is legally unsupported, could have far-reaching and untenable consequences if granted by this Court, and should be rejected outright," Capital One argued in its motion.
The lawsuit, which Capital One disclosed in a securities filing earlier this month, was filed by customers who initially opened accounts at
The conduct at issue in the suit began in 2019, when Capital One started offering an account called "360 Performance Savings." As of last month, 360 Performance Savings customers were receiving 4.30%, while 360 Savings customers were getting 0.30%, according to the complaint.
The lawsuit acknowledged that Capital One has the right to change the interest rates it pays. But the plaintiffs argued that the bank exercised its discretion unfairly, and that 360 Savings customers who went to the Capital One website and saw prominent ads for high rates on 360 Performance Savings accounts could be deceived into thinking that they were getting those rates.
Gregory Mishkin, a longtime Capital One savings account holder who lives in the Atlanta area, learned about the lawsuit last week from an American Banker article. The article led him to discover that he, too, has been receiving low returns, rather than the much more competitive rate advertised by Capital One for the 360 Performance Savings account, he said.
"I nearly threw up," Mishkin said in an interview. "If I had any idea that they were playing these games, I'd just set up another account."
Since the Federal Reserve began hiking interest rates last year, certain other online banks
In its court filing last week, Capital One made a series of legal arguments in support of its claim that the suit should be thrown out.
Among those arguments is the idea that the plaintiffs are seeking to use state law in a way that would significantly interfere with Capital One's ability to receive deposits, which is a federally granted power.
The lawsuit, which is seeking class-action status, alleges that Capital One violated certain state laws in Illinois, Virginia, Massachusetts and Pennsylvania that deal with consumer protection and deceptive business practices.
Capital One also noted that the plaintiffs did not point to any contractual provision that required the bank to notify 360 Savings customers about the creation of, or the 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," the bank wrote in its motion to dismiss the lawsuit. "On the contrary, they allege that Capital One advertised the Performance Savings account on its website …"
In their lawsuit, the plaintiffs said that between 2013 and 2019, Capital One advertised the 360 Savings account as a "high-interest" account, and that it later used similar language to describe the 360 Performance Savings account.
Capital One, in its filings last week, noted that the plaintiffs did not allege that Capital One promised to pay any specific rate. The bank wrote that the description of its accounts as offering "high" interest "is too vague and subjective to be an actionable misrepresentation."
