In a surprising legal turn, the Consumer Financial Protection Bureau (CFPB) has decided to withdraw its lawsuit against Capital One, potentially forfeiting up to $2bn in reimbursements for customers.
The dropped lawsuit is part of a broader shift under the bureau’s new leadership, which appears to be stepping back from a number of pending enforcement actions against financial companies. This move could affect dozens of cases nationally, signalling a significant policy change towards consumer protection enforcement.
The original lawsuit accused Capital One of misleading consumers about the interest rates offered through its “360 Savings” accounts. While promoting the account as having one of the highest interest rates nationwide, Capital One allegedly failed to inform customers about a similar account offering substantially higher rates—up to 14 times more at certain points. This case underscores the bureau’s critical role in enforcing consumer rights and the potential consequences of its reduced vigilance.
Chuck Bell, advocacy program director at Consumer Reports, expressed concern over the CFPB’s decision to dismiss the lawsuit, suggesting it sends a harmful message regarding consumer protection. “Dismissing its lawsuit against Capital One sends the message that the CFPB plans to look the other way when banks and other financial companies mistreat their customers,” Bell stated. He emphasized the broad impact this could have, noting that consumers who have been treated unfairly by banks, paycheck advance companies, and other lenders stand to lose billions in potential relief.
This development comes amid other CFPB enforcement uncertainties, including challenges to consumer protection rules implemented last year, such as limits on credit card late fees and bank overdraft charges, which were projected to save consumers around $15bn annually.
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