Federal regulatory body opts not to file legal action against Capital One financial corporation
In a significant move, the Consumer Financial Protection Bureau (CFPB) has decided to dismiss its lawsuit against Capital One and several other companies, including Rocket Homes, the Pennsylvania Higher Education Assistance Agency, Vanderbilt Mortgage and Finance, and Heights Finance Holding Company. The decision, made under the leadership of Mark Paoletta, chief legal officer for the CFPB and general counsel for the Office of Management and Budget (OMB), reflects a broader strategy by the Trump-aligned CFPB leadership to narrow the agency’s scope and reduce regulatory burdens on financial institutions.
The CFPB's lawsuit against Capital One was related to the bank's acquisition of ING Direct USA in 2012 and the subsequent 360 Savings account offering. The bureau alleged that Capital One led its customers to believe they were receiving a higher percentage yield than they actually were, and that the bank did not notify its 360 Savings account holders about the new offering, keeping them in the dark about better-paying accounts. Additionally, the CFPB claimed that Capital One lowered and froze the interest rate on the 360 Savings account between 2019 and 2024, while offering a higher interest rate on a similar product, the 360 Performance Savings account.
Capital One has stated that it "welcome[s] the CFPB's decision to dismiss this action." However, the dismissal of the lawsuit has faced criticism from some quarters. Sen. Tina Smith, D-MN, has expressed concern about the CFPB's decision, stating that it appears to run counter to the nominee's promise to review the CFPB's pending litigation. Sen. Elizabeth Warren, D-MA, has criticized the timing of the announcement to drop the Capital One lawsuit, stating that it seems "designed to embarrass" the nominee and show who is in charge of the agency.
This move by the CFPB aligns with actions taken under the Trump administration-appointed acting director Russell Vought, who has focused on shrinking the CFPB’s role. This includes terminating or suspending staff, withdrawing proposed regulations, and reversing or reducing penalties from prior consent orders against financial entities—steps signaling a clear pivot toward deregulation and a reduced enforcement agenda. Critics, including former enforcement leaders at the CFPB, have expressed concern that the bureau under this leadership is not enforcing the law meaningfully.
The 360 Savings account offering is also the subject of a class-action lawsuit filed against Capital One by customers. The outcome of this lawsuit, along with the CFPB's decision to dismiss its own lawsuit, will likely have significant implications for both Capital One and the CFPB's future enforcement actions. As the CFPB continues to evolve under its new leadership, it remains to be seen how this shift in strategy will impact consumers and the financial industry as a whole.
The decision made by the CFPB to dismiss its lawsuit against Capital One, a major business entity, has sparked debate in the realm of finance, particularly regarding the CFPB's commitment to protecting consumers and enforcing financial regulations. The CFPB's lawsuit was centered around Capital One's practices with their 360 Savings account offering, including the bank's alleged misrepresentation of yield percentages and failure to notify customers about better-paying accounts. This case is also the subject of a separate class-action lawsuit involving Capital One and the outcome of both lawsuits may have notable consequences for the bank and future CFPB enforcement actions in finance-related businesses.
