Capital One's $425M Depositor Settlement Gains Preliminary Approval After Initial Rejection

• U.S. District Judge David Novak in Alexandria, Virginia approved the settlement after Capital One agreed to enhanced terms beyond the $425 million cash payment
• The revised agreement includes a commitment to pay higher interest rates on 360 Savings accounts going forward, worth an estimated $530 million according to depositors' lawyers
• The preliminary approval follows the judge's rejection of an earlier settlement accord in November, indicating the initial terms were insufficient

Summary: Capital One's $425M Depositor Settlement Gains Preliminary Approval

Key Development:

A federal judge granted preliminary approval on Monday to Capital One's revised $425 million class action settlement with depositors who alleged they were denied high interest rates on their savings accounts. U.S. District Judge David Novak in Alexandria, Virginia, approved the deal two months after rejecting an earlier version.

Financial Details:

• Settlement amount: $425 million
• Additional benefit: Approximately $530 million in value from increased future interest rates on 360 Savings accounts
• Combined value: Over $950 million in total benefits to depositors

Case Background:

The lawsuit centered on allegations that Capital One cheated depositors out of competitive interest rates on their 360 Savings accounts. New York Attorney General Letitia James announced the preliminary approval.

Key Changes:

The revised settlement includes a commitment from Capital One to pay higher interest rates going forward to 360 Savings account holders, addressing concerns that led to the initial rejection in November. This prospective benefit, valued at roughly $530 million by depositors' lawyers, was critical to securing judicial approval.

Market Implications:

This settlement represents significant financial exposure for Capital One and may set precedent for how banks structure and communicate interest rates on savings products. The case highlights regulatory scrutiny of banking practices and consumer protection in deposit accounts. The preliminary approval moves the case toward final resolution, though depositors must still be notified and given opportunity to object before final approval.

Next Steps:

The preliminary approval allows the settlement process to proceed, with final approval pending after required notice periods and hearings.