Capital One Failed to Specify Why It Closed Certain Consumer Credit Accounts, Class Action Alleges

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A proposed class action alleges Capital One has violated the Equal Credit Opportunity Act (ECOA) by failing to disclose to certain cardholders exactly why their credit card accounts were closed.

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The 21-page lawsuit was filed by a consumer who claims that Capital One issued him a credit card and then closed the account in October 2022 without providing a “specific statement of reasons,” including where it received the information on which its decision to close the account was based. That same month, the plaintiff applied for and was granted another credit card from Capital One, but three weeks later the bank again closed the account without specifically explaining why the action was taken, the case alleges.

“By refusing to provide Plaintiff and members of the putative class the specific reasons for adverse action, Capital One has denied them of their private statutory right to receive such information, of the educational benefit of such information, and the ability to engage in the informed use of credit,” the filing states, adding that Capital One has deprived affected individuals of the opportunity to correct any misinformation that it may have acted on.

According to the complaint, Capital One informed the plaintiff of the closure of his accounts by sending him two copies of a “generic form letter” that lacked the specificity required by ECOA. Instead, the letters merely stated that Capital One had “discovered adverse past or present legal action involving an individual or entity associated with the account. Unfortunately, it can’t be reopened, and we are not able to offer additional information about this decision,” the suit relays.

The case argues that Capital One could have offered more information about its decision to close the account but was “simply unwilling to do so.”

“Without knowing for certain what information Capital One relied upon or the source of any such information, Plaintiff was – and still is – unable to fix or correct such information if it turns out to be incorrect or incomplete,” the case says, alleging that Capital One based its decision on information it obtained from a third-party consumer reporting agency. 

The complaint claims that Capital One’s “unilateral” termination of the plaintiff’s accounts has negatively affected his debt-to-credit ratios since the man needed to pay an outstanding balance after the accounts were closed but received no new credit. Moreover, the bank’s alleged misconduct has caused the plaintiff to worry about his ability to obtain credit in the future, the suit says.

The lawsuit looks to represent anyone in the United States who applied for a consumer credit card from Capital One, had their application either denied or granted then closed, and was sent a letter stating “Capital One has discovered adverse past or present legal action involving an individual or entity associated with the account. Unfortunately, it can’t be reopened, and we are not able to offer additional information about this decision.”

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