A Judge Rejected Capital One's First Settlement Offer
Summary
Capital One built a nearly identical savings account paying up to 14 times more interest, then kept most existing customers from finding out. Capital One and class-action lawyers first proposed settling for $425 million -- a $300 million lump-sum fund plus a separate $125 million pool that would have given remaining customers a temporary rate boost, reverting after less than 16 months -- and a federal judge rejected the deal as neither reasonable nor adequate. The replacement, also headlined at $425 million, instead makes the higher rate permanent.
A rate that never moved
New York's complaint against Capital One⧉ lays out the mechanics. In September 2019, 360 Performance Savings paid 1.90% while 360 Savings paid 1.0% -- a modest gap. Both rates fell together through the pandemic; by December 2020, 360 Performance Savings sat at 0.40% and 360 Savings at 0.30%. Then the rates diverged. As the Federal Reserve pushed its own benchmark from 0.08% in January 2022 to 5.33% by January 2024, Capital One raised 360 Performance Savings to keep pace -- 3.30% by January 2023, a peak of 4.35% in January 2024. The 360 Savings rate never moved again. It sat at 0.30%, a gap of just over 4 percentage points -- more than 14 times lower than what Capital One was paying on functionally identical deposits held in the other account.
The complaint alleges Capital One scrubbed references to 360 Savings from its marketing and instructed customer-service staff not to volunteer that the higher-rate account existed. Its own example is stark: a customer who kept $10,000 in 360 Savings from the account's 2019 launch through October 2024 earned about $186 in interest; the same $10,000 in 360 Performance Savings over the same period would have earned about $1,090 -- roughly $904 more, almost six times as much.
View data as table
| Sep. 2019 -- 360 Savings | 1% | |
|---|---|---|
| Sep. 2019 -- 360 Performance Savings | 1.9% | |
| Dec. 2020 -- 360 Savings | 0.3% | frozen here through 2024 |
| Dec. 2020 -- 360 Performance Savings | 0.4% | |
| Jan. 2024 -- 360 Savings | 0.3% | unchanged since Dec. 2020 |
| Jan. 2024 -- 360 Performance Savings | 4.4% | more than 14x the 360 Savings rate |
Why a judge said no
Seven class-action suits over the rate gap, filed starting in mid-2023, were consolidated into a single case before Judge David J. Novak in the Eastern District of Virginia. In June 2025 the parties reached a settlement -- a $300 million class fund plus a $125 million pool of forward-looking interest for accountholders who stayed in 360 Savings -- and the court granted it preliminary approval. It never received final approval. In a November 6, 2025 order, the court found the deal "neither reasonable nor adequate" and denied the motion outright.
The math behind that ruling is what makes it worth reading. The court found the settlement would have given the class a recovery of less than 10% of damages, and that it failed the roughly four to five million accountholders -- three-quarters of the class -- who remained in 360 Savings. Under the rejected deal, those customers would have received about 0.8% interest for under 16 months before Capital One could revert them to whatever rate it chose, still four to eight times less than what 360 Performance Savings was then paying.
The court also singled out Capital One's own evidence of adequate notice: a single email sent to 360 Savings holders on December 6, 2024, titled "Earn a higher APY with a new account today." Less than half of recipients opened it, and only about 1% of those who did acted on it -- despite the fact that doing so would have earned them nearly eight times more interest. The court called that response rate proof the notice had failed, not proof customers were satisfied.
Eighteen states, and a second deal
The rejection wasn't just the judge's own reading of the numbers. New York's attorney general and 17 other state attorneys general -- a coalition representing nearly half the U.S. population -- had filed a brief opposing the settlement two months earlier, after New York sued Capital One separately in May 2025⧉. By contrast, individual objectors numbered fewer than 20 and opt-outs fewer than 100 -- small numbers the court explicitly declined to read as a sign the class was content.
Capital One and the plaintiffs reached a new settlement in December 2025⧉, and the New York and amici attorneys general agreed to drop their own suits once it took effect. The headline fund is still $425 million -- but structured differently. Instead of a temporary interest pool, Capital One agreed to match the 360 Performance Savings rate for existing 360 Savings accountholders⧉ going forward, an ongoing benefit the New York attorney general's office estimated at $530 million nationwide -- more than four times the $125 million forward pool the court had just rejected. Capital One's own first-quarter 2026 SEC filing confirms the $425 million reserve and states that the court granted final approval on April 20, 2026.
View data as table
| Rejected deal -- temporary interest pool | 125 | ~0.8% APY for under 16 months, then reverts |
|---|---|---|
| Replacement deal -- estimated future interest | 530 | permanent rate match to 360 Performance Savings |
- The two-tier system wasn't an accident. Capital One's own internal talking points told customer-service staff to cite "market conditions" whenever a 360 Savings customer asked about the rate -- the same script whether rates were falling in 2020 or whether Capital One was simply declining to raise them while 360 Performance Savings climbed to 4.35%.
- One email was Capital One's evidence that customers had a real choice. The court found that of the customers who opened Capital One's single notice about the higher-rate account, only about 1% acted on it -- despite standing to earn nearly eight times more interest by doing so. The court read that as proof the notice failed, not proof of customer indifference.
- Individual objections were a poor proxy for how the class actually felt. Fewer than 20 people objected and fewer than 100 opted out of the first settlement -- normally a sign a deal is acceptable -- but a coalition of 18 state attorneys general representing nearly half the U.S. population argued, and the court agreed, that weak individual pushback reflected bad notice rather than satisfaction.
Figures are from New York's May 2025 complaint⧉, the court's November 2025 order rejecting the first settlement, the January 2026 stipulation⧉, attorney general releases from New York⧉ and California⧉, and Capital One's SEC filing.
The $530 million future-interest figure is the New York attorney general's own estimate, not an independent BlackLeaf projection. This piece does not address claims-payment timing or any post-approval appeals, which were not confirmed against a primary document as of publication.
Sources(6) ▾
- New York Attorney General, State of New York v. Capital One, N.A. and Capital One Financial Corporation -- Complaint (2025-05-14) — The state's civil complaint against Capital One; source for the 360 Savings/360 Performance Savings rate history, the '14 times higher' disparity, and the $10,000 interest-loss example. ag.ny.gov · original document
- U.S. District Court for the Eastern District of Virginia, Order (Denying Motion for Final Approval of Class Action Settlement), Document 259, MDL No. 1:24-md-3111 (DJN) (2025-11-06) — The federal court's order rejecting Capital One's first proposed settlement; source for the original $300M/$125M structure, the 4-5 million remaining accountholders, the notice-email response-rate finding, and the 18-state-AG opposition. classaction.org
- U.S. District Court for the Eastern District of Virginia (filed jointly by Capital One, the New York AG, and seven amici state AGs; mirrored by the California AG), Stipulation and Order, Document 294, MDL No. 1:24-md-3111-DJN-WBP / Civil Action No. 1:25-cv-01403-DJN-WBP (2026-01-09) — The stipulated order among Capital One, the New York AG, and the amici state AGs setting the terms of the replacement settlement; source for the litigation timeline and the $425M certification requirement. oag.ca.gov · original document
- New York Attorney General, Attorney General James Applauds New Capital One Settlement (2026-01-12) — Announces the replacement settlement's headline figures: $425 million national restitution, $34 million to New York, and an estimated $530 million in future interest. ag.ny.gov · original document
- California Attorney General, Attorney General Bonta Helps Secure $425 Million Capital One Settlement (2026-01-13) — Independent confirmation of the $425 million and $530 million figures from a second state attorney general's office among the amici. oag.ca.gov · original document
- Capital One Financial Corporation, filed with the U.S. Securities and Exchange Commission, Capital One Financial Corporation -- Form 10-Q, quarter ended March 31, 2026 (2026-05-07) — Capital One's own disclosure of the litigation timeline, the $425 million reserve, and the April 20, 2026 final-approval date -- independent corroboration from the defendant's own regulatory filing. sec.gov
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Capital One marketed its 360 Savings account as one of the nation's best. In 2019 it launched a nearly identical account, 360 Performance Savings, and stopped opening new 360 Savings accounts -- but kept servicing millions of existing ones, and kept them earning a fraction of what the newer account paid. By January 2024 the gap reached more than 14 times⧉: 4.35% against a 360 Savings rate frozen at 0.30% since December 2020, according to a complaint New York's attorney general filed in 2025⧉. Capital One and class-action lawyers first proposed settling for $425 million. A federal judge said no. The replacement deal, also headlined at $425 million, does something the first one didn't: it makes the higher rate permanent, not temporary.