The bank’s addition of higher interest rates for depositors with 360 Savings accounts gained a federal judge’s preliminary approval of the revised settlement after he had rejected an earlier one, Reuters reported Monday (Jan. 12).
The higher interest rates will deliver about $530 million to the depositors, in addition to the $425 million payment that was included in the earlier proposed settlement that was rejected by the judge, according to the report.
Capital One did not immediately reply to PYMNTS’ request for comment.
In the class action lawsuit, customers accused the bank of falsely promising high interest rates on its 360 Savings accounts while offering much better rates to new customers on its 360 Performance Savings accounts.
It was reported in May that Capital One would pay $425 million to settle the lawsuit without admitting any wrongdoing. That figure included $300 million to cover interest the 360 Savings depositors could have gotten with 360 Performance Savings accounts, as well as $125 million in interest to depositors who still have 360 Savings accounts.
In September, 18 state attorneys general filed an amicus brief asking the court to reject the proposed class action settlement in the case, which was separate from a lawsuit brought by the states. They argued that the settlement would shortchange Capital One customers.
A federal judge rejected that proposed settlement in November, saying that the payout was too small and that the strength of the plaintiffs’ claims justified “significantly greater relief.” He said the deal seemed to give 360 Savings depositors less than 10% of their damages and left them with the low-yielding accounts while 360 Performance Savings customers earned four to eight times more.
The judge ordered both sides to return to the negotiating table to address his concerns.
New York Attorney General Letitia James, who led the coalition of attorneys general opposing the earlier proposed settlement, said in a Monday press release that she applauded the new settlement because it delivers justice and ensures Capital One customers will get the higher interest rates they were originally promised.
