Attorney General Nessel Joins Bipartisan Coalition Opposing Unfair Capital One Settlement

LANSING – Michigan Attorney General Dana Nessel has joined a bipartisan coalition of 17 other attorneys general in 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 (PDF) led by New York Attorney General Letitia James, who sued Capital One in May (PDF) for misleading its online savings account customers about the interest rates they would receive, the 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 Nessel and the coalition are urging the court not to approve this unfair 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 coalition urges the court to reject the settlement and any attempt to use a private agreement to stymie New York’s enforcement action.

“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,” Nessel said. “I stand with my colleagues in urging the Court to reject this deal and ensure consumers get the restitution they deserve.”

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 Nessel and the 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 New York Attorney General’s Office case.    

Attorney General Nessel and the 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.

Joining Attorney General Nessel in filing this amicus brief are the attorneys general of Arizona, California, Colorado, Connecticut, Hawai'i, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Oregon, Rhode Island, and Washington.

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