A coalition of 18 state attorneys general, led by New York Attorney General Letitia James, has formally objected to Capital One’s proposed $425 million settlement concerning allegations that the bank misled depositors about interest rates on savings accounts. The group contends that the settlement fails to adequately compensate affected customers and allows Capital One to continue its deceptive practices without meaningful reform.
The dispute centers on Capital One’s 360 Savings accounts, which were marketed as high-interest savings options. However, while maintaining a 0.3% interest rate for existing 360 Savings account holders, Capital One introduced a nearly identical product, the 360 Performance Savings account, offering rates exceeding 4% to new customers. This discrepancy led to claims that the bank effectively shortchanged existing customers by not informing them of the higher-yielding option.
Under the terms of the proposed settlement, Capital One would pay $300 million to compensate 360 Savings account holders for the interest they missed out on, plus an additional $125 million in interest for those who still hold these accounts. Despite this, the attorneys general argue that the average depositor, who lost over $717 in interest, would receive less than $54 in direct compensation. They also highlight that the settlement does not require Capital One to adjust its current practices, allowing the bank to continue profiting from the artificial distinction between the two account types. ([reuters.com](https://www.reuters.com/sustainability/boards-policy-regulation/capital-one-425-million-settlement-with-depositors-should-be-rejected-us-states-2025-09-24/?utm_source=openai))
Attorney General James emphasized the inadequacy of the settlement, stating, “Capital One customers worked hard for their savings, only to be misled and cheated out of billions of dollars in interest payments that their bank had promised them.” She further criticized the settlement for permitting Capital One to persist in its deceptive practices without accountability. ([ag.ny.gov](https://ag.ny.gov/press-release/2025/attorney-general-james-leads-bipartisan-coalition-opposing-unfair-capital-one?utm_source=openai))
Similarly, California Attorney General Rob Bonta expressed concerns over the settlement’s fairness, noting that it proposes a $300 million payout against nearly $3 billion in consumer losses. He also pointed out that the settlement would allow Capital One to maintain the deceptive practices that led to the lawsuit. ([oag.ca.gov](https://oag.ca.gov/news/press-releases/consumers-deserve-justice-attorney-general-bonta-opposes-inadequate-capital-one?utm_source=openai))
The attorneys general have filed an amicus brief urging the U.S. District Court in Alexandria, Virginia, to reject the settlement. They argue that it not only fails to provide adequate restitution to affected customers but also undermines ongoing efforts by state authorities to hold Capital One accountable for its actions. A final hearing on the settlement is scheduled for November 6, where the court will consider these objections alongside the proposed agreement. ([reuters.com](https://www.reuters.com/sustainability/boards-policy-regulation/capital-one-425-million-settlement-with-depositors-should-be-rejected-us-states-2025-09-24/?utm_source=openai))
As this legal challenge unfolds, it underscores the broader issue of transparency and fairness in financial institutions’ dealings with consumers, particularly concerning the disclosure of interest rates and account options. The outcome of this case may have significant implications for how banks communicate with their customers and structure their savings products in the future.