Capitol News

Michigan Attorney General Dana Nessel has joined a bipartisan group of 17 other state attorneys general in opposing a proposed class action settlement involving Capital One. The coalition argues that the settlement would not provide adequate compensation to customers who were allegedly denied more than $2 billion in unpaid interest.

The amicus brief, led by New York Attorney General Letitia James, comes after New York filed a lawsuit against Capital One in May for misleading online savings account customers about the interest rates they would receive. According to the coalition, the proposed settlement fails to hold Capital One accountable and benefits the company at the expense of its customers. The attorneys general are urging the court not to approve what they describe as an unfair agreement.

Capital One has argued that approval of the class action settlement should prevent further restitution efforts by the New York Attorney General’s Office. The coalition opposes this position and asks the court to reject any attempt to use a private agreement to limit state enforcement actions.

“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.”

The dispute centers on Capital One’s marketing of its 360 Savings accounts as offering “one of the nation’s best savings rates.” However, while national interest rates increased beginning in 2022, Capital One kept rates for these accounts low and instead introduced a similar product—360 Performance Savings—with much higher returns. The lawsuit alleges that this practice misled existing 360 Savings customers and allowed Capital One to avoid paying substantial amounts in interest.

Nessel and her colleagues argue that under the proposed settlement, Capital One would be able to continue underpaying its 360 Savings customers without making meaningful changes. Although $125 million in additional interest payments would be provided under the agreement, this amount is far less than what customers would have received if paid at higher rates. On average, affected consumers lost over $717 each but would receive less than $54 under the current proposal.

Other states joining Michigan and New York include Arizona, California, Colorado, Connecticut, Hawai'i, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, Ohio, Oregon, Rhode Island, and Washington.