A recent settlement in a class action lawsuit has forced Capital One Bank to set aside a total of $16 million to compensate thousands of its customers, who have become plaintiffs.
These users alleged that the financial institution, based in McLean, Virginia, applied illegal fees on certain banking transactions. The lawsuit, which has caught the attention of numerous affected, focuses on fees related to insufficient funds and overdraft fees on represented checks or ACH transactions, which were not refunded according to the terms of the accounts.
Lawsuit Against Capital One: Without Accepting Any Guilt, Agreed to Pay $16M
The agreement was reached without Capital One admitting guilt or any irregularity, which has been a common practice in these types of resolutions since it exists as a legal figure in the United States.
But don’t get too excited, because not all the money will go to the plaintiffs. In reality, the total of $16 million will not only cover the clients’ claims, but also legal fees and any other compensation ordered by the court. This ensures that the litigation does not continue, avoiding high legal costs and possible damage to the company’s reputation.
Other Lawsuits Against Capital One Bank for a Merger With Another Company
Despite this agreement, Capital One continues to face legal challenges. Recently, a new class action lawsuit was filed in a federal court in Virginia.
The plaintiffs, Tyler Baker and Lora Grodnick, Capital One credit card holders, are seeking to stop the merger between Capital One and Discover, a deal valued at $35 billion. The merger, according to the plaintiffs, would significantly reduce competition in the credit card market, negatively affecting American consumers.
Baker and Grodnick argue that this merger could lead to a “substantial reduction in competition,” lessening the competitive pressure on Capital One and other large issuers. In addition, they argue that the negative impact would extend to the payment processing market, a crucial sector that involves large companies such as Visa, Mastercard, and American Express. These companies, which together control 87% of the market, have previously been accused of collusive practices to inflate prices, in collaboration with Capital One.
The plaintiffs believe that the merger of Capital One and Discover could transform Capital One into a direct competitor to Visa and Mastercard, which could result in less competition and possible anti-competitive practices in the payment processing market.
As a result, Baker and Grodnick are seeking an injunction preventing the merger, based on violations of U.S. antitrust laws, specifically the Clayton Act and the Sherman Act.
The Capital One-Discover merger class action lawsuit is Baker et al. v. Discover Financial Services Inc. et al., Case No. 1:24-cv-01265, in the U.S. District Court for the Eastern District of Virginia.
Bank of America Also in Trouble Over a Class-Action Lawsuit
The legal landscape around financial institutions does not stop there. Another notable case involves Bank of America, which recently agreed to pay $21 million to settle a class-action lawsuit over the imposition of improper fees on incoming wire transfers. The case, known as “Aseltine v. Bank of America NA”, was filed in the United States District Court for the Western District of North Carolina. The plaintiffs allege that the bank imposed a $15 fee on wire transfers without the knowledge or consent of the account holders.
According to the lawsuit, Bank of America deliberately concealed this commission, which resulted in improper profits at the expense of its customers. “Consumers have the right to know what commissions they are paying and when. In this case, Bank of America failed to meet that standard,” said one of the lead lawyers in the lawsuit. Despite not admitting liability, Bank of America accepted the settlement and pledged to compensate those affected.
The terms of the agreement stipulate that customers who paid these fees during the specified period will receive proportional compensation. Those with active accounts at Bank of America will see the credit credited directly to their accounts, while those who no longer have active accounts will receive a check in the mail.
