Capital One is the latest in a string of financial institutions to settle allegations of unfair lending, with a deal to pay $2.85 million in damages. Its 2009 acquisition of Chevy Chase Bank led to a review of financial records, which exposed the bias against black and Latino mortgage borrowers at Chevy Chase since 2006. Greater than 3,100 such consumers were charged hundreds of dollars more than white bank customers by loan officers who were granted wide discretion to charge extra fees or offer price concessions.
While the abuse affected borrowers nationwide, the problem was concentrated in the Washington, D.C., metropolitan area and in West Virginia. Capital One did not admit to any wrongdoing, and court documents confirm that the allegations are not tied to any of its lending practices. The bank, which had already compensated nearly 300 borrowers who were overcharged, said it agreed to the settlement in order to avoid the cost and risk of additional litigation.