The most recent of several enforcement actions taken under the Trump administration was the Consumer Financial Protection Bureau’s decision to withdraw a complaint against Capital One Financial Corp. that was filed during the Biden administration. In a filing Thursday in the U.S. District Court for the Eastern District of Virginia, the consumer watchdog dropped the case with prejudice, which means it cannot be revived. When the lender launched a new savings account with a higher interest rate than it offered to existing savings accounts, the CFPB claimed last month that it had deceived consumers.
Additionally, the dismissals occur on the same day that Jonathan McKernan, Trump’s choice to lead the CFPB, testified before the Senate during a confirmation hearing. The CFPB also dismissed a complaint against the online lender SoLo Funds this week, as well as a lawsuit filed against the Pennsylvania Higher Education Assistance Agency (PHEAA) last year, alleging that the agency unlawfully collected on student loans that were discharged in bankruptcy.
CFPB Drops ‘Savings 360’ Lawsuit Against Capital One
The case, filed on January 14, 2025, against Capital One and its parent firm, Capital One Financial Corp, for defrauding millions of consumers of over $2 billion in savings account interest, was dismissed by the Consumer Financial Protection Bureau (CFPB) on Thursday. Ten days before President Trump took office, the complaint was first filed, alleging that Capital One had deceived consumers by keeping interest rates on its 360 Savings accounts low and not providing sufficient notice to account holders about the new, higher-yielding 360 Performance Savings account.
As the candidate to head the Consumer Financial Protection Bureau promised to “right size” the watchdog under President Trump, the agency dropped a number of lawsuits against lenders from the Biden period.
In 2024, the CFPB first brought legal action against Capital One. The bank allegedly defrauded millions of customers of over $2 billion in interest, according to the agency. The CFPB said that Capital One had assured its clients that its flagship “360 Savings” account had one of the “best” and “highest” interest rates in the country.
Even though interest rates were rising across the country, the bank reportedly maintained the rate low. Additionally, it claimed that Capital One maintained the comparable interest rate for the accounts at 0.30% from December 2020 until at least August 2024, “a rate that falls considerably short of the level described in its marketing.”
What has happened?
The watchdog agency filed the lawsuit ten days prior to President Trump’s inauguration, alleging that Capital One deceived consumers by keeping rates low on its 360 Savings account while launching a higher-yielding 360 Performance Savings account and failing to notify holders of the previous account about the new offering. So now the CFPB of America has opted to withdraw its lawsuit against Capital One.
The bank was accused of misleading customers and caused them to forfeit almost $2 billion in savings account interest payments. Thursday’s decision to dismiss the lawsuit is consistent with President Donald Trump’s rapid dismantling of the CFPB and in the past, the President has advocated for the agency’s dissolution.
The Senate confirmation hearing for Jonathan McKernan, Trump’s choice to lead the CFPB, took place at the same time that the lawsuit against Capital One was dismissed. This follows two weeks after the Trump administration stopped almost all of the CFPB’s operations and closed its headquarters.
At his Senate confirmation hearing Thursday, Jonathan McKernan, Trump’s nominee to serve as the CFPB’s permanent director and a former FDIC board member, spoke. The Trump administration plans to keep the CFPB running, although more effectively, according to a federal court filing on February 24.
CFPB drops additional lawsuits
According to news, the CFPB also reportedly withdrew lawsuit it had filed against Vanderbilt Mortgage and Finance and Rocket Homes on Thursday. Trump sacked Rohit Chopra, the former director of the CFPB, two weeks after Inauguration Day. He was named in these cases as well as the one against Capital One.
The CFPB was established as an independent federal agency in 2011 to oversee consumer protection in the financial industry under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The regulator has penalized banks for activities including opening bank accounts for clients without their consent and charging high overdraft fees for checking accounts.
Future of the CFPB
Two weeks after the Trump administration shut down the CFPB’s headquarters and drastically reduced its operations, a court document dated February 27 indicated that the agency voluntarily withdrew the Capital One lawsuit. The Trump administration wants to keep the CFPB running, but in a more efficient manner, according to a federal court filing filed on February 24.
Established under the Dodd-Frank Act in 2011, the CFPB has a history of fining banks for things like opening bank accounts for clients without their consent and charging exorbitant overdraft fees. Important initiatives undertaken by the CFPB, an independent government organization dedicated to financial sector consumer protection, include:
- 2024: Lawsuit against Chase, Bank of America, Wells Fargo, and Early Warning Services for allegedly failing to safeguard the Zelle network against fraud, which resulted in consumer losses of hundreds of millions of dollars.
- 2024: mandated $95 million in overdraft charge refunds and penalties from Navy Federal Credit Union.
- 2022: Wells Fargo was ordered to pay $3.7 billion in fines and reparations for overdraft fees and loan interest.
| Homepage | KeralaCoBank.Com |
Samarth Choudhary is a Chief Editor at keralacobank.com. He has overall editorial experience of 10 years in online media. He has completed his graduation from University of California and masters in Finance from University of Dallas in year 2010. His major interest and expertise is in Finance, Taxes, Government Aid and Schemes. His Major focus is to help users to get relevant information which are published on keralacobank.com in easy and precise form.