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Consumers who say they were cheated out of $2 billion in interest payments from Capital One (COF+1.33%) will have to pursue action against the company on their own. That’s because the U.S. Consumer Financial Protection Bureau on Thursday dropped a legal action against Capital One, which the agency had accused last month of “unlawfully [misleading] consumers” about its savings products.
On January 14, the regulator alleged that Capital One advertised its 360 Savings account as a “high interest” account with a variable rate that it claimed was one of the best in the country. The bank then allegedly froze interest rates for those account holders and stopped offering it to new customers after 2019. It then introduced an almost identical 360 Performance Savings account, differing only in that it paid out “substantially more” in interest, the agency said.
The dismissal continued President Donald Trump’s rapid moves to dismantle the agency, which he has said should be eliminated. It came the same day as Trump’s nominee to head the CFPB, Jonathan McKernan, testified before the Senate in a confirmation hearing.
Mariano Torras, a professor of economics at Adelphi University, called the move “alarming” and a sign that the Trump administration will prioritize corporate interests.
“Protecting consumers against corporate malfeasance is fundamental; if this goes, I’d say all bets are off — it could signify greater problems down the road,” Torras told Quartz.
If the CFPB is dismantled and rendered toothless, then no government agency is safe, Torras argued. The CFPB was designed to provide more protection and insulation than other government agencies.
“It is not clear what, if anything, will survive the Trump/Musk chainsaw. Sorry to sound hyperbolic; but I fear this is not hyperbole.” Torras says.
As of now, the CFPB website remains functional and it proclaims: “Each week we send about 25,000 complaints about financial products and services to companies for response.”
The Capital One case is just the latest in a slew of dismissed CFPB pursuits. Also on Thursday, CFPB ended a lawsuit brought last year against the student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA), which it accused of illegally collecting on student loans discharged in bankruptcy.
—Rocio Fabbro contributed to this article.