Lansing, Michigan – Michigan Attorney General Dana Nessel has joined 17 other attorneys general in opposing a proposed class action settlement involving Capital One that could leave millions of misled consumers without the restitution they deserve. The coalition, led by New York Attorney General Letitia James, is urging a court to reject the deal, claiming it would let Capital One off the hook for deceptive practices that allegedly cost customers more than $2 billion in unpaid interest.
“This settlement lets Capital One off the hook for deceiving customers while also undermining the ability of state attorneys general to hold bad actors accountable,” said Attorney General Nessel. “I stand with my colleagues in urging the Court to reject this deal and ensure consumers get the restitution they deserve.”
Lawsuit Alleges Misleading Marketing and Billions in Lost Interest
The core of the dispute centers around Capital One’s 360 Savings accounts, which the company marketed as offering “high interest” and “one of the nation’s best savings rates.” Customers were led to believe their savings would grow faster than in traditional accounts. However, according to the lawsuit filed by New York’s Attorney General in May, Capital One failed to raise the interest rate on 360 Savings accounts even as national rates increased beginning in 2022.
Instead, the company introduced a nearly identical product—360 Performance Savings—that offered significantly higher rates, sometimes more than 14 times greater than the older 360 Savings accounts. This quiet pivot, critics argue, allowed Capital One to avoid paying out billions in interest to existing customers while advertising better rates to new ones.
The lawsuit contends that customers were never told they needed to switch accounts to benefit from higher returns. As a result, many remained stuck in lower-rate 360 Savings accounts, losing out on potential earnings they were led to expect.
Settlement Falls Short of Justice, AGs Say
The proposed class action settlement now under consideration would provide just $125 million in additional interest to affected customers. But according to the attorneys general, this amount is a mere fraction of the more than $2 billion Capital One is alleged to have withheld by keeping rates low.
Furthermore, the settlement would not require Capital One to fix its dual-rate scheme. It would allow the bank to continue offering lower rates on the older 360 Savings accounts while offering more competitive returns on newer accounts. This setup, they argue, is the very heart of the deception.
The coalition estimates that even with the $125 million payout, Capital One would still pocket more than $2 billion in unpaid interest. While the average customer missed out on approximately $717 in interest earnings, they would receive less than $54 under the terms of the settlement. No other structural changes or commitments to fairer business practices are part of the deal.
Challenge to State Authority Raises Concerns
Adding to the controversy, Capital One is arguing that the settlement should block the New York Attorney General’s lawsuit, which seeks independent restitution for customers. The attorneys general strongly oppose this, warning that allowing a private class action settlement to preempt state enforcement would set a dangerous precedent.
“This proposed deal benefits Capital One more than the customers they misled,” the brief argues, calling on the court to uphold the state’s ability to enforce consumer protection laws.
Broad Coalition Urges Rejection
The amicus brief filed in court was backed by attorneys general from Arizona, California, Colorado, Connecticut, Hawai‘i, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, and Washington, in addition to Michigan.
These officials argue the court must not approve a settlement that leaves the banking giant unaccountable and consumers undercompensated. They are pressing for a resolution that provides full restitution to customers and enforces changes that will prevent similar misconduct in the future.