UFB Direct Hit with Lawsuit Over Allegedly Deceptive Advertising of ‘Highest-Yield’ Savings Accounts

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A proposed class action accuses UFB Direct of running a “classic bait and switch” scheme whereby it has “lured” new accountholders with the promise of its highest-yielding savings accounts, only to cap the annual percentage yield (APY) shortly thereafter.

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The 34-page lawsuit alleges that UFB, the online division of San Diego-based Axos Bank, has misled and defrauded tens of thousands of consumers nationwide who were “duped” into opening new accounts with the bank before it “covertly” capped the APY associated with their accounts, converted them into so-called “legacy accounts” and began offering higher rates to new accountholders. The suit claims UFB engaged in this “pernicious misconduct” while assuring customers that they were receiving its highest APY.

According to the case, UFB implemented the alleged scheme in early 2022, when it began advertising its “highest-yielding savings account” with a “variable” interest rate—that is, an interest rate that would change in accordance with business and economic conditions.

As part of the apparent scheme, the defendant, after amassing thousands of new accountholders, would then cap the interest rates on those existing accounts without notice and begin promoting a new “highest-yielding” variable rate savings account “under a slightly different name with a higher interest rate and APY,” the complaint relays. In addition, UFB would modify its account agreement to redefine the previous savings program as a “legacy account,” the filing says.

“Consumers with funds in legacy accounts were thereby duped into leaving their funds to languish at dramatically lower APY than they anticipated and far below the rates offered by other banks with online-only, high-yield savings account programs,” the lawsuit contends.

The suit claims that the bank, through UFB’s alleged scheme, “lull[ed] its depositors into complacency” and misled them into believing they were investing their savings into its variable, highest-yielding account. Despite the representations, however, the accounts consumers opened with UFB were only its highest-yielding products for a “trivial, arbitrary, and undisclosed period,” the case charges.

Per the complaint, a reasonable consumer perusing UFB’s website would not notice a difference between the bank’s current highest-yielding account program and the “legacy accounts,” as the only distinction is the “subtle replacement of the adjective” describing UFB’s latest highest-yielding offering.

The plaintiff, a current UFB accountholder residing in California, claims he is a victim of the defendant’s alleged “bait and switch” scheme. According to the filing, the man opened a UFB “Preferred” Savings account in February 2023, when the advertised APY was 4.55 percent.

The APY on the plaintiff’s account was later capped at 5.02 percent and then lowered to 4.50 percent, where it has stagnated since, the suit says. Notably, UFB currently advertises savings accounts with an APY of 5.25 percent, the case adds.

The plaintiff contests that since opening the account with UFB, he has been “cheated out of hundreds of dollars and continues to be cheated every day.”

The lawsuit looks to represent anyone who has been a UFB Direct high-yield savings accountholder since UFB created the high-yield savings account.

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