Attorney General Mayes Opposing Unfair Capital One Settlement

Mayes Joins Bipartisan Coalition of 17 Attorneys General Filing Amicus Brief Opposing Class Action Settlement That Would Shortchange Customers

PHOENIX – Attorney General Kris Mayes is opposing a proposed class action settlement that would shortchange Capital One customers who were cheated out of more than $2 billion in unpaid interest in an amicus brief filed yesterday by a bipartisan coalition of 17 Attorneys General. Following New York Attorney General Letitia James' lawsuit against Capital One in May for misleading its online savings account customers about the interest rates they would receive, the bipartisan coalition argues that the proposed class action settlement fails to hold Capital One accountable and would ultimately benefit Capital One at the expense of the customers it deceived and underpaid. Attorney General Mayes and the bipartisan coalition are urging the court not to approve this unfair settlement. 

“Banks should not be profiting by misleading customers,” said Attorney General Mayes. “Capital One misled and underpaid Arizonans and a time when consumers are already struggling to make ends meet. The proposed settlement shortchanges customers and fails to hold Capital One accountable." 

Capital One marketed its 360 Savings accounts as “high interest” accounts with “one of the nation’s best savings rates” that would earn its customers more than an average savings account. However, while interest rates rose nationwide beginning in 2022, Capital One kept the interest rates for its 360 Savings accounts artificially low. Instead, Capital One created “360 Performance Savings,” a nearly identical type of savings account that provided much higher interest rates than 360 Savings – at one point, more than 14 times higher. As New York’s lawsuit alleges, this allowed Capital One to mislead 360 Savings customers and avoid paying billions of dollars in interest. 

Attorney General Mayes and the bipartisan coalition assert that the proposed settlement would allow Capital One to continue underpaying and deceiving its 360 Savings customers. Capital One promised 360 Savings customers, “your money will earn much more than what it would in an average savings or money market account,” yet continues to pay them below the national average. The settlement would not require Capital One to change this scheme of paying 360 Savings customers lower interest than otherwise-identical 360 Performance Savings customers, the scheme that is at the heart of both the class action lawsuit and the Office of the Attorney General’s (OAG) case.    
 
Attorney General Mayes and the bipartisan coalition also argue that the proposed class action settlement shortchanges 360 Savings customers and fails to impose any requirements that Capital One change its behavior to avoid misleading its customers. The settlement would provide $125 million in additional interest to customers who continue to hold 360 Savings accounts. However, even with these additional interest payments, the 360 Savings interest rate would still be significantly lower than the 360 Performance Savings rate. In the time it would take Capital One to pay out the $125 million in additional interest, it would have paid over $800 million at the 360 Performance rate. In total, Capital One would keep more than $2 billion in unpaid interest while the average consumer, who lost out on more than $717 in interest payments, would receive less than $54 in direct compensation under the settlement. 
 
Capital One has also argued that the class action settlement should prevent the New York Attorney General’s Office from securing restitution for Capital One customers through its lawsuit. The bipartisan coalition urges the court to reject the settlement and any attempt to use a private agreement to stymie New York’s enforcement action. 
 
Joining Attorney General Mayes in filing this amicus brief are the attorneys general of California, Colorado, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, and Washington. 

A copy of the amicus brief is here.