Core Viewpoint - A federal judge has rejected Capital One's proposed $425 million settlement with depositors, indicating that the payout was insufficient given the claims made by the plaintiffs [1][2][4]. Group 1: Settlement Details - The settlement aimed to resolve claims that Capital One offered low interest rates of 0.3% on its "high interest" 360 Savings accounts while providing higher rates to new customers on 360 Performance Savings accounts [2][4]. - Capital One had previously agreed to pay $300 million in unpaid interest to 360 Savings depositors and an additional $125 million to customers still holding their accounts [3]. Group 2: Judge's Ruling - U.S. District Judge David Novak stated that the plaintiffs' claims warranted "significantly greater relief," as the proposed settlement would only compensate 360 Savings depositors with less than 10% of their damages [4]. - The judge emphasized that the settlement would not alleviate the ongoing financial harm experienced by the class members, who would continue to earn significantly lower interest compared to 360 Performance Savings customers [4]. Group 3: Ongoing Legal Issues - The judge has ordered both parties to return to negotiations to address his concerns regarding the settlement [5]. - Capital One is also facing a separate lawsuit in New York, where the Attorney General has accused the company of misleading customers about the availability of higher interest savings accounts [5][6]. Group 4: Industry Context - The legal issues arise during a time when savings behavior is changing, particularly among younger Americans, with Generation Z reportedly saving at higher rates than older generations [7]. - Approximately 80% of Gen Z consumers maintain some savings, although most have less than three months' worth of expenses saved, indicating a challenging financial landscape [8].