Capital One’s $425 million class-action settlement payments could be delayed a year or more because of an appeal seeking to withdraw the settlement, meaning more than 5 million class members will have to keep waiting for their checks.
The distribution of payments was expected to begin this week. Instead, the Capital One settlement administrator shared an update that the opposing party is appealing in hopes of taking the matter back to court.
“As a result of the appeal, any payments to class members from the settlement fund or in the form of additional interest as provided in the settlement agreement will be significantly delayed (potentially for more than one year),” the settlement website reads.
Complaints are common in large class houses – and many end up being unsuccessful – but they are often cases where payments take longer than consumers expect.
The 360 Savings case: Why Capital One was sued
Many of the lawsuits allege that Capital One paid low annual percentage rates (APYs) for 360 Savings accounts when it introduced 360 Performance Savings accounts in September 2019.
APYs on Savings Performance accounts have been higher since then. Despite the amounts, the lawsuit alleges that these two accounts are “identical”, according to the payment website. At launch, new accounts paid 1.9% APY, while older accounts paid 1%.
The gap widens as the Federal Reserve raises interest rates in 2022 and 2023. From April 2024 to September 2024, Performance Savings 360 paid 4.35% while 360 Savings paid 0.3%, according to the payment website.
By June 2024, at least six lawsuits had been filed in California, New Jersey, New York, Ohio and Virginia challenging Capital One’s underpaid interest rates to 360 Savings customers. It was then that the proceedings were consolidated in the US District Court for the Eastern District of Virginia.
Capital One continues to deny wrongdoing but agreed to settle. A judge granted final approval of a settlement in the Capital One 360 Savings Account Interest Rate Litigation on April 20.
In addition to the $425 million settlement fund, Capital One has agreed to match the savings rate of 360 Performance on 360 Savings accounts and continue to offer both products for at least two years.
In total, the amount of money paid is estimated by the special king to be just over $1 billion.
After fees, charges and service awards are deducted, the fund will be divided based on “the average interest rate each Payment Class Member would have earned if their 360 Savings accounts paid the same amount of interest and worked on the 360 Performance Savings account,” according to the payments website. The biggest beneficiaries will be people who had large savings balances. Individual ratings are not available.
Customers are likely to be included in the class if they had a 360 Savings account anytime between September 18, 2019 and June 16, 2025.
Capital One Payment Complaint
On June 17, a Capital One customer filed a complaint, claiming the settlement is in the hundreds of millions of dollars. The notice of appeal was filed by attorney Michelle Coles, who is representing herself and posted a $25,000 appeal bond. Coles was an attorney at the Department of Justice in the Civil Rights Division until 2022; He is an active member of the Washington, DC bar.
In a previous filing, Coles and other dissenters argued that “Capital One and class counsel have reached an agreement to settle this $9 billion lawsuit for just $425 million.”
The legal arguments are complex, but lead to disagreements over the numbers and how much customers are owed. The settlement website says the $425 million fund represents about 38% to 57% of what class members would have received at trial. Coles says it’s actually no more than 15%.
“That means they keep 85% of our damages,” he told Money. “If they pay us $425 million, that means they keep $2.5 billion in interest that they owe us.”
Coles said his 360 Savings balance was about $70,000 at the time of the class and he initially believed he owed about $10,000, according to court documents. Coles presented his objections during the April 20 sentencing hearing, which is documented in court documents.
Referring to his time at the Department of Justice, Judge David Novak said: “You understand that in any lawsuit, there is a risk / reward. You have to look at what are the chances of success against your result, which is correct. It’s like the old Rolling Stones song, ‘you don’t always get what you want, but you always get what you need,'” according to the text.
Those comments from Novak “feel like a slap in the face because every settlement agreement we make rewards Capital One for its fraud,” he told Money.
During the April 20 hearing, Novak continued: “I don’t agree with what Capital One did here. I think what they did was wrong, that’s why they wrote such a big check.”
But, he said, “You have to look at what the risk of litigation is to the plaintiffs versus the reward, which is what the class counsel did here.”
Novak authorized the settlement and set the appeal bond at $25,000 — not the $6 million requested by the class’s attorney. Coles says others wanted to appeal the case, but he was the only one willing to pay the bond.
The attorneys for the compensation class consider the complaint “meritless” and continue to believe that “the settlement is the best for the class,” according to the complaint’s website.
What to do if you’re waiting for a Capital One settlement payment
If you are in the settlement phase, this is an exercise in patience. There is nothing to do now. Unlike most residences, this one did not require an application form; degrees were automatic. Eligible Capital One customers had until March 30 to choose their payment method.
Coles says he expects to file his appeal in September, but the U.S. Court of Appeals for the Fourth Circuit has yet to set a notification schedule.
Asked what it’s like to be among 5 million people and their money, Coles says class members were “tricked” into thinking the $425 million settlement was fair. He adds that he thinks it’s worth waiting more time to make sure the proper payments are made.
“I’m acting in the best interest of the class,” Coles said. “We have been waiting six years for Capital One to pay the interest they owe us.”
