Capital One sued for allegedly stealing its credit card rewards

The Non-Financial Ledger

There is a specific kind of betrayal that comes from a system you trusted. You did the research before you signed up. You read the ads. You used the card responsibly. You paid your bill. You watched your rewards balance grow, month by month, sometimes over years. You made plans around that balance: the family vacation, the statement credit that would offset the annual fee, the business trip you were finally going to book on miles you’d earned through thousands of ordinary purchases. You were a good customer. Capital One told you so, repeatedly, in the emails they sent encouraging you to keep spending.

Then one morning, without warning, the app tells you the account is closed. You call. You wait on hold. You get transferred. You get a supervisor. Every single one of them tells you the same thing: the rewards are gone. There is no procedure to transfer them. There is no form to fill out. There is no appeal. The decision is final. The money you earned — and in some cases already paid income tax on, because Capital One issued a 1099 for sign-up bonuses — belongs to Capital One now.

One CFPB complainant described accumulating reward miles over years specifically to fly and see their mother, only to have both the card and the miles erased on the same day Capital One claimed inactivity. Another described being a loyal customer for over a decade, never missing a payment, and watching their rewards disappear along with a credit score hit from the sudden account closure. An elderly woman wrote to the CFPB describing years of “responsible usage and loyalty” gone in an instant, saying she believed she was being taken advantage of due to her age and “limited ability to fight back legally.” A small business owner described Capital One keeping their $6,000 balance open and payable while simultaneously refusing to return $7,000 in rewards points.

These are people who did everything right. Capital One’s position, confirmed in writing to at least one plaintiff in October 2025, is that the rewards were “forfeited.” Not returned. Not credited. Forfeited. As if the people who earned them had somehow lost a bet.

Legal Receipts: What the Documents Actually Say

The lawsuit quotes Capital One’s own agreements and communications against it. These are the words Capital One wrote and sent to its customers.

Capital One Credit Card Rewards Redemption FAQ (Exhibit D to Complaint)

“Capital One rewards won’t expire for the life of the account as long as the account remains in good standing. If you close the account, you may lose unredeemed rewards.”

• This language, directly from Capital One’s own FAQ, limits reward forfeiture to situations where the cardholder closes the account. It contains no provision for Capital One to forfeit rewards when Capital One closes the account and the cardholder is not in default. The lawsuit argues that Capital One’s actual policy is the exact opposite of what this FAQ promises.
• Capital One’s Terms & Conditions state that Capital One can only disqualify a cardholder from the rewards program for fraud, abuse of program privileges, or violation of the Terms. The complaint documents that Capital One forfeited rewards from cardholders who committed none of those violations, a fact confirmed in Capital One’s own account closure letters.

Capital One Letter to Plaintiff Navkal, October 9–10, 2025 (referenced in Complaint ¶62)

“Additionally, we’ve confirmed that the additional spend bonus of $2,000.00 for every $500,000.00 spent was forfeited due to the account ending in 7597 closing before its first anniversary.”

• This letter is Capital One admitting in writing that it canceled $8,000 in earned Spend Bonus rewards. Capital One does not contest that the rewards were earned. Its defense is that closing the account forfeits them — precisely the policy the lawsuit argues was never disclosed and was never contractually authorized.
• The same October letter confirms the rewards balance was reduced to zero. The complaint documents that purchases of $121,869.64 were still posting to the account after closure, generating $2,437.39 in purchase rewards that Capital One also refused to pay.

Capital One June 16, 2025 Email to Plaintiff Navkal (referenced in Complaint ¶63)

[Capital One sent Navkal an email encouraging him to make additional purchases to reach the next Spend Bonus reward threshold — five weeks before it unilaterally closed his account and forfeited all accumulated rewards.]

• Capital One was actively soliciting additional spending from a customer it would close one month later, without disclosing it was considering closure. When it did close the account, Navkal had already reached 98.5% of the $500,000 threshold for the next $2,000 bonus. Capital One collected the interchange fees on every one of those dollars and paid nothing.

CFPB Consumer Financial Protection Circular 2024-07 (December 12, 2024), cited in Complaint ¶20–21

“Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned.” — CFPB Director

• Federal regulators identified this exact practice — closing accounts and revoking earned rewards — as an unfair and deceptive practice under federal consumer protection law. The CFPB circular was issued December 12, 2024. Capital One continued its rewards cancellation policy after that date. Navkal’s account was closed July 21, 2025, seven months after the CFPB put the entire industry on explicit notice.

CFPB May 2024 Issue Spotlight: Credit Card Rewards, cited in Complaint ¶22

“Issuers forfeit, expire, revoke, or otherwise take away hundreds of millions of dollars in earned rewards value each year. This means banks benefit from marketing high promotional bonuses and earning rates but do not end up paying out the full cost of those offers. In the most extreme example, an issuer unilaterally closes a credit card account, and the consumer forfeits previously earned rewards.”

• The CFPB used the phrase “most extreme example” to describe exactly what Capital One is accused of doing here. Federal regulators documented this as a systemic industry problem generating “hundreds of millions of dollars” in annual harm before Capital One closed Navkal’s account.

What You Were Told vs. What Was Happening

Capital One’s advertising and cardholder agreements promised a rewards program that would pay out what cardholders earned. The complaint documents a systematic gap between those promises and Capital One’s actual operating policy.

• Capital One advertised the Spark Cash Plus card with an “unlimited 2% reward for all purchases” and a “$2,000 reward for every $500,000 spent.” Nowhere in those advertisements did Capital One disclose that it could cancel and refuse to pay those rewards upon account closure.
• Capital One’s FAQ stated rewards “won’t expire for the life of the account as long as the account remains in good standing” and that only the cardholder closing the account could result in lost rewards. The lawsuit argues Capital One maintained an undisclosed policy that applied forfeiture whenever Capital One chose to close an account.
• Capital One’s Terms & Conditions promised cardholders a 90-day window to redeem earned rewards after purchases post to their accounts. Capital One denied Navkal the ability to redeem rewards within that window after closing his account, and confirmed in writing that his balance was zeroed.
• Capital One’s closure letter to Navkal gave the reason: “activity on one or more of your Capital One accounts that is inconsistent with typical customer account usage.” The ECOA requires creditors to give a specific, permitted reason for an adverse action. The lawsuit argues this phrase is Capital One’s internal standard, not a legally compliant reason — and it tells the cardholder nothing about what they could do differently.

Profit-Maximization at All Costs

Every dollar in rewards that Capital One cancels instead of paying is a dollar that flows directly to Capital One’s bottom line. The financial mechanics are documented in Capital One’s own SEC filings.

• Capital One’s parent company, Capital One Financial Corporation, reported customer rewards expense of $9.0 billion in 2024, up from $8.2 billion in 2023 and $7.6 billion in 2022. The rewards reserve — money Capital One has set aside for rewards it expects to eventually pay — stood at $8.2 billion as of December 31, 2024. Every canceled reward reduces the amount Capital One actually has to pay out of that reserve.
• Capital One charges merchants credit card processing fees “typically amounting to 2%–3% of each transaction” every time a Capital One card is used. The complaint alleges Capital One charges a larger processing fee for its rewards cards, since rewards are funded at least in part by those merchant fees. When Capital One cancels rewards, it has already collected the processing fees from merchants that were meant to fund those rewards — and keeps both.
• For Navkal’s account alone, Capital One collected merchant processing fees on $121,869.64 in purchases that posted after account closure, kept those fees, and refused to pay the corresponding $2,437.39 in purchase rewards. It also refused to pay $8,000 in Spend Bonus rewards and a $150 Annual Bonus reward — all confirmed earned, all confirmed unpaid.
• Capital One’s own 10-K states its “current assumption is that the substantial majority of all rewards earned will eventually be redeemed.” Every reward it cancels instead represents a gap between that public assumption and the actual policy described in this lawsuit.

The Chronology: How It Went Down

The sequence of events in Navkal’s case illustrates exactly how Capital One’s alleged policy operates in practice: lure the customer in with rewards promises, collect fees on every purchase, encourage more spending, then close the account and keep everything.

Legal Minimalism: The Letter but Not the Spirit

Capital One’s agreements contain carefully worded language designed to give it the appearance of fairness while maintaining maximum flexibility to deny rewards. The lawsuit identifies several specific examples of this gap between written promise and actual practice.

• Capital One’s agreements state rewards “may” be lost when an account is closed — a word that, in context, was paired only with the scenario where the cardholder closes the account. The lawsuit argues Capital One exploited the permissive “may” to create an undisclosed blanket forfeiture policy it could apply whenever it chose to close an account, while never disclosing that policy to cardholders.
• The Equal Credit Opportunity Act (ECOA) requires creditors to provide a “specific reason” for an adverse action, meaning a reason that tells the borrower how their credit is deficient and what they could do to improve it. Capital One’s stated reason — “activity inconsistent with typical customer account usage” — is based on Capital One’s own internal standards, which are not disclosed to cardholders. The lawsuit argues this satisfies the letter of an “adverse action notice” while providing zero information that would actually help a customer understand or contest the decision.
• Capital One’s Customer Agreement specifies what Capital One may do if a cardholder is in default: demand they stop using the card, cancel billing arrangements, return or destroy cards, and pay remaining balances. The agreement does not list forfeiture of earned rewards as a permitted action — even in default. The lawsuit argues this means even if Navkal had been in default (he was not), the forfeiture of rewards would still have been unauthorized under Capital One’s own contract.

How Capitalism Exploits Delay: The 90-Day Trap

Capital One’s agreements promise a 90-day window to redeem earned rewards after purchases post to an account. The lawsuit documents that Capital One simultaneously eliminates any practical ability to use that window the moment it closes an account.

• Multiple CFPB complainants report being told by Capital One customer service that there is “no procedure to transfer or redeem rewards from a closed account.” If no procedure exists, the contractually promised 90-day redemption window is functionally meaningless from the moment Capital One acts. The window exists on paper; the door it was supposed to open does not.
• One complainant describes being given contradictory information by multiple Capital One representatives over months — one saying they could receive their rewards by mail, another saying the 90-day window had already passed, a third saying the funds were forfeited. By the time the company settled on “forfeited,” the opportunity to act had expired.
• The New York subclass has a specific legal claim under GBL §520-e, which requires issuers to give cardholders a genuine 90-day period to redeem points after an account modification. Capital One’s practice of immediately zeroing out the rewards balance, confirmed in writing in Navkal’s case, is directly what that statute prohibits.