States Challenge Capital One Settlement as ‘Inadequate’

Key Takeaways

• Settlement Size: Capital One reached a proposed $425 million settlement over allegations it misled consumers with its “360 Savings” accounts.
• Consumer Losses: Attorneys general say consumers lost nearly $3 billion in interest, far exceeding the proposed payout.
• Settlement Terms: Class members will automatically receive payments, with larger payouts if they close or convert their accounts by October 2, 2025.
• State Opposition: Attorneys general from 18 states filed an amicus brief urging the court to reject the deal as inadequate and potentially harmful to ongoing enforcement.
• Final Approval: The U.S. District Court for the Eastern District of Virginia will hold a fairness hearing on November 6, 2025.

Deep Dive

California Attorney General Rob Bonta has joined a coalition of 17 other state attorneys general in urging a federal court to reject Capital One’s proposed $425 million settlement in a multi-district class action, arguing that it does not adequately compensate consumers who lost nearly $3 billion in potential interest earnings.

The case is pending before the U.S. District Court for the Eastern District of Virginia. The lawsuit accuses Capital One of deceptively marketing its “360 Savings” accounts as high-interest products while failing to inform customers about its newer “360 Performance Savings” accounts, which paid interest rates up to 14 times higher. By not notifying consumers that they could easily transfer funds to the higher-yield accounts, the bank allegedly saved itself billions in interest.

The settlement fund totals $425 million, with automatic cash payments to class members who held 360 Savings accounts between September 18, 2019, and June 16, 2025. According to the settlement website, no claim form is required, but consumers can choose whether to receive payments by check or electronically. Those who close their 360 Savings accounts (or convert them to 360 Performance Savings) before October 2, 2025, are eligible for payments estimated to be about 15% larger.

The settlement also contemplates additional interest payments for account holders who keep their accounts open beyond the October deadline. Consumers who wish to exclude themselves (opt out), object, or comment must do so by October 2, 2025. A final approval hearing is scheduled for November 6, 2025, in Alexandria, Virginia.

Attorneys General Say It Falls Short

Despite the size of the settlement, attorneys general argue it does not come close to the $3 billion consumers collectively lost and risks allowing Capital One to continue the practices at issue. They also warn that approval could prevent states from pursuing their own enforcement actions, including a pending lawsuit led by New York Attorney General Letitia James.

“Capital One has misled consumers through false marketing and a lack of transparency regarding its savings account system,” Bonta said. “Given an opportunity to make loyal customers whole, Capital One is instead attempting to not only underpay those it has harmed, but maintain the deceptive, anti-consumer practices that prompted this lawsuit to begin with.”

A Broad Coalition

The amicus brief, led by New York, was joined by attorneys general from Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Ohio, Oregon, Rhode Island, and Washington. Together, they represent states where nearly half of the affected account holders reside, according to their filing.

The coalition argues that the settlement is neither fair nor reasonable under federal rules and that Congress, through the Class Action Fairness Act, specifically recognized the interest of state attorneys general in ensuring consumers are not bound by unfair settlements.

With the final hearing set for November, the court will now weigh whether the $425 million agreement adequately resolves claims of deception or if the attorneys general’s objections warrant a rejection of the deal.

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