Maryland and other states have settled with Capital One for $425 million after the bank was found to have used deceptive practices and misleading language for its 360 Savings accounts, according to the Office of the Maryland Attorney General.

The $425 million settlement is a revised agreement stemming from a complaint about Capital One’s 360 Savings accounts, after Maryland and 17 other states formed a coalition for customers who were “cheated out of more than $2 billion in unpaid interest,” Attorney General Anthony G. Brown said.

The original class-action settlement was set for less than $300 million before the 18 attorneys general opposed it in September. As a result, Capital One must also change its “deceptive” marketing practices in addition to paying restitution.

“For years, Capital One shortchanged Maryland consumers while steering new customers to much higher rates,” Brown said. “In opposing the previous, unfair settlement, we pushed for a better agreement that returns millions more to Marylanders’ pockets.”

According to the attorney general, Capital One marketed 360 Savings accounts as having high interest rates and among the best savings rates offered by banks. Yet, as interest rates rose in the U.S. in 2022, Capital One kept interest rates for the 360 Savings accounts at the same level and created a new 360 Performance Savings account.

The 360 Performance Savings account was identical to the 360 Savings account but carried interest rates that were as high as 14 times those of the 360 Savings account.

Capital One is now required to match 360 Savings and 360 Performance Savings interest rates and eliminate the tiered approach to savings accounts while providing customers with $530 million in future interest in addition to the $425 million settlement. Previously, customers were only set to receive $125 million in future interest.

“In the time it would take Capital One to pay out the $125 million in additional interest, it would have paid over $800 million at the 360 Performance rate,” Brown said in September. “In total, Capital One would keep more than $2 billion in unpaid interest while the average consumer, who lost out on more than $717 in interest payments, would receive less than $54 in direct compensation under the settlement.”

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