A federal judge of the U.S. District Court for the Eastern District of Virginia rejected Capital One’s $425 million class action settlement with depositors who accused the bank of tricking them out of higher interest rates on Nov. 6, ruling that the payout was insufficient and that millions of depositors would continue to be shortchanged.
Based in McLean, Virginia, Capital One admitted no wrongdoing as part of the original settlement.
In the decision to reject the settlement amount, court documents also mention Capital One’s claims to have alerted 360 Savings Account customers about switching to the 360 Performance Savings accounts. However, Judge David Novak called the company’s notification a “marketing pitch” rather than an informational notification.
“Nowhere in these notices do the parties clarify that Capital One continues to pay 360 Savings Account holders a much lower interest rate than if they held 360 Performance Savings Accounts,” the decision states. “Nor does this language speak to the gross disparity in interest rates between these two accounts.”
Court documents also discuss the receipt of “numerous letters” from class action members, as well as a brief filed by the New York Attorney General’s office on behalf of New York State and 17 other states, objecting to the proposed settlement.
The judge gave credit to the 18 state attorneys general in opposition to the settlement, saying collectively they represent almost half of the U.S. population, and “presumably, nearly half of class members.”
“The Court finds that the proposed class action settlement fails to meet the standard laid out in Rule 23(e), specifically as to the adequacy of the proposed settlement and the equitable treatment of class members,” the decision states. “While the proposed settlement is fair from a procedural standpoint, the Court finds it neither reasonable nor adequate on substance.”
In its decision, the court stated specifically that Capital One’s settlement would provide a recovery of less than 10 percent of damages and that it failed to provide sufficient relief to almost 75 percent of those depositors remaining in the 360 Savings accounts.
“Under the proposed settlement, these millions of class members would continue to experience the same financial harm that they have already experienced for years,” the decision states. “Such relief falls short of what is merited by Plaintiffs’ claims.”
Based on current interest rates, the judge also found that class action members would receive only about 0.8 percent interest on their deposits for less than 16 months, after which Capital One could revert the rates back to whatever it chooses.
The judge noted that 360 Savings Account depositors would be earning four to eight times less than the 360 Performance Savings account holders.
The Court has now directed all parties to continue further settlement negotiations.
Capital One Financial Corporation is a financial holding company with $468.8 billion in deposits and $661.9 billion in total assets as of September 2025. Capital One N.A. operates primarily in Louisiana, Maryland, New York, Texas, Virginia and the District of Columbia. The Fortune 500 company trades on the New York Stock Exchange under the symbol “COF.”
The Epoch Times has reached out to Capital One for comment.
