Recently, a class action settlement against Capital One Bank awarded thousands of customers $16 million in compensation for alleged illegal fees on banking transactions.
Hundreds of plaintiffs who joined the lawsuit alleged that Capital One violated the terms of their accounts by failing to refund insufficient funds or overdraft fees on represented checks or ACH transactions. Although Capital One accepted the settlement, it agreed to the million-dollar sum with the class group without admitting guilt.
The McLean, Virginia-based Capital One Financial Corporation was sued in the class action by account holders who saw how they were improperly charged filing fees on certain transactions. These fees refer to unreimbursed charges for insufficient funds or overdrafts on represented checks or ACH transactions.
The agreement between the parties of $16 million prevents the litigation from moving forward, with the millionaire legal costs that this has for the company, and the consequent damage to its image.
This covers the amounts claimed by clients as well as legal fees and costs and any court ordered service indemnity.
We have already written about this class action lawsuit against Capital One in this article, but it seems that the nightmares for the company do not end because a new lawsuit has just been filed.
New Class Action Lawsuit Against Capital One — What Are the Plaintiffs Asking For?
Plaintiffs Tyler Baker and Lora Grodnick, holders of Capital One credit cards, have filed a class action lawsuit against Capital One and Discover in the American Justice, with the aim of stopping the merger between the two credit card companies.
The aforementioned plaintiffs claim that this merger would reduce competition in the credit card market. The lawsuit was filed in a federal court in Virginia.
In their lawsuit, Baker and Grodnick argue that Capital One Bank’s $35 billion acquisition of Discover could result in a “substantial lessening of competition,” which would definitely negatively affect credit card consumers in the United States. And God knows that Americans love to have and use credit cards, right?
According to the plaintiffs, the merger would eliminate one of the two vertically integrated companies in the credit card market, which would significantly reduce the competitive pressure on Capital One and other large issuers.
But this is not all, since the plaintiffs argue that the merger would also negatively impact the payment processing market by reducing the healthy and necessary competition of a free market such as the United States.
Discover is one of four companies operating in the domestic credit card payment processing market, along with Visa, Mastercard and American Express. Visa and Mastercard, which jointly control 87% of the market, have previously been accused of collusion to inflate prices, in collaboration with Capital One, and we have written about that in other articles as well.
With this merger, Capital One could become a direct competitor to Visa and Mastercard, taking control of one of their main competitors, which could lead to less competition and possible pricing practices in the payment processing market.
Other Class Actions Against Visa and Mastercard
The plaintiffs claim that this merger could result in higher prices and interest rates for consumers, given that Capital One would control a significant portion of the market, becoming the sixth largest bank in the country. Accordingly, they are seeking a court order blocking the merger, alleging violations of antitrust laws, specifically the Clayton Act and the Sherman Act.
Moreover, merchants who accepted Visa or Mastercard between January 1, 2004 and January 25, 2019 could be eligible for compensation as part of a $5.6 billion collective bargaining agreement, known as the “Payment Card Interchange Fee Agreement.” The deadline for submitting a claim is August 30, 2024.