More on Capital One's Scheme to Cheat Customers Out of $2 Billion
A closer look at the claims against the banking giant
It’s no secret that big banks often behave badly.
America’s largest banks have a track record of taking actions that hurt their customers in the name of ever-increasing profits.
A recent example is the Capital One savings scandal.
Capital One devised a savings account product that allowed them to pocket profits while customers were left with pitifully low rates. Now, they’re facing a lawsuit holding them accountable for deceptive marketing tactics.
A deeper dive into the suit reveals just how Capital One cheated customers.
These two paragraphs get to the heart of the matter:
In September 2019, Capital One created a new type of savings account called "360 Performance Savings." The account was identical to the 360 Savings account in every way but one: 360 Performance Savings accounts paid much higher interest rates. At launch, 360 Performance Savings accounts paid a 1.9% annual interest rate. At the time, 360 Savings accounts paid 1%.
That spread would increase substantially over time. Starting in December 2020, Capital One froze the rate of the 360 Savings accounts at 0.3%. By January 2024, the 360 Performance Savings account paid 4.35% annual interest, and the 360 Savings account still paid 0.3%.
Capital One took great pains to hide the new “Performance” savings product from existing 360 savings customers, denying them collectively $2 billion in interest payments.
Credit Bureaus Continue to Fail Consumers
Both Experian and Equifax failed to properly investigate consumer complaints about credit reporting errors and both routinely re-entered previously deleted negative credit entries. These actions hurt consumers seeking access to credit by wrongly lowering their credit scores.
A major credit reporting agency faces a $15 million fine after an investigation found its processes allowed inaccurate information to remain on consumer credit reports.
Equifax will pay the fine to settle claims by the Consumer Financial Protection Bureau (CFPB) that the company ignored evidence provided by consumers in credit entry disputes, allowed inaccurate information to remain on credit reports, and created a confusing dispute resolution process.
According to a recently filed lawsuit, Experian failed to conduct investigations into consumer disputes of errors on credit reports and often reinserted or failed to remove erroneous, negative entries.
The Consumer Financial Protection Bureau (CFPB) is suing Experian, claiming the credit reporting agency conducted sham investigations that allowed credit report errors to remain on a consumer's report. The CFPB says the persistence of these errors negatively impacted access to credit, housing, and employment.
It’s good that CFPB is taking action. But, if you notice an error, don’t wait for these cases to be resolved.
Here’s more on what you can do to fix errors on your credit report. And, if the credit bureau doesn’t cooperative, definitely complain to the CFPB.