Capital One could face enforcement action from the
Consumer Financial Protection Bureau (CFPB) over alleged misrepresentations
tied to its savings accounts, SEC filings showed. This development followed customer complaints that the
bank’s introduction of a new high-interest account was unclear, leaving some
customers with lower earnings than they might have otherwise received.
Customer Lawsuit
In the ongoing dispute, some of Capital One’s customers claim that the bank introduced a 360 Performance Savings account offering
higher interest than their existing “360 Savings” accounts without
properly informing them of the discrepancy.
According to a lawsuit filed last year, this lack of
transparency allegedly led to lost earnings for many who stayed with the
lower-rate option. Customers argue that the bank’s communication about
the new account was inadequate. However, the Wall Street banking giant maintained that it had clearly posted
the information online and retained the contractual right to change interest
rates at its discretion, Reuters reported.
Earlier this month, Capital One reportedly received a
letter from the CFPB warning of possible enforcement action related to the
case. The agency is exploring whether to initiate litigation against the bank. Capital One has responded by filing a motion to
dismiss the original lawsuit. This comes as Capital One awaits regulatory
approvals for the proposed $35.3 billion purchase of Discover Financial
Services.
Acquisition Plans
The deal has already attracted attention from New York
Attorney General Letitia James, who announced an investigation last week into
whether the acquisition violates state antitrust laws.
If the acquisition goes through, Capital One pledged $265 billion over five years for community lending, philanthropy, and investment, a move that could help ease regulatory concerns. If the CFPB proceeds with enforcement action or
litigation, it could prompt increased scrutiny of how banks communicate rate
changes and other account features to customers.
Earlier this year, Capital One Financial disclosed its
decision to buy Discover for $35.3 billion in an all-stock agreement. The deal,
which involves the American financial services company, brings together two of
America’s largest credit card companies.
According to the announcement, Discover’s shareholders will
receive 1.0192 Capital One shares for each of their existing unit holdings. At
the closing of the deal, Capital One shareholders will reportedly hold 60% of
the combined company, while Discover commands 40% ownership.
Capital One could face enforcement action from the
Consumer Financial Protection Bureau (CFPB) over alleged misrepresentations
tied to its savings accounts, SEC filings showed. This development followed customer complaints that the
bank’s introduction of a new high-interest account was unclear, leaving some
customers with lower earnings than they might have otherwise received.
Customer Lawsuit
In the ongoing dispute, some of Capital One’s customers claim that the bank introduced a 360 Performance Savings account offering
higher interest than their existing “360 Savings” accounts without
properly informing them of the discrepancy.
According to a lawsuit filed last year, this lack of
transparency allegedly led to lost earnings for many who stayed with the
lower-rate option. Customers argue that the bank’s communication about
the new account was inadequate. However, the Wall Street banking giant maintained that it had clearly posted
the information online and retained the contractual right to change interest
rates at its discretion, Reuters reported.
Earlier this month, Capital One reportedly received a
letter from the CFPB warning of possible enforcement action related to the
case. The agency is exploring whether to initiate litigation against the bank. Capital One has responded by filing a motion to
dismiss the original lawsuit. This comes as Capital One awaits regulatory
approvals for the proposed $35.3 billion purchase of Discover Financial
Services.
Acquisition Plans
The deal has already attracted attention from New York
Attorney General Letitia James, who announced an investigation last week into
whether the acquisition violates state antitrust laws.
If the acquisition goes through, Capital One pledged $265 billion over five years for community lending, philanthropy, and investment, a move that could help ease regulatory concerns. If the CFPB proceeds with enforcement action or
litigation, it could prompt increased scrutiny of how banks communicate rate
changes and other account features to customers.
Earlier this year, Capital One Financial disclosed its
decision to buy Discover for $35.3 billion in an all-stock agreement. The deal,
which involves the American financial services company, brings together two of
America’s largest credit card companies.
According to the announcement, Discover’s shareholders will
receive 1.0192 Capital One shares for each of their existing unit holdings. At
the closing of the deal, Capital One shareholders will reportedly hold 60% of
the combined company, while Discover commands 40% ownership.
This post is originally published on FINANCEMAGNATES.
