Capital One Illegally Assesses Cash Advance Fees on Payment App Transactions, Class Action Claims

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A proposed class action lawsuit alleges Capital One illegally assesses cash advance fees on credit card purchases that are not cash equivalents, including peer-to-peer transactions on platforms like Venmo, PayPal or Cash App.

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The 15-page Capital One lawsuit was filed by a VentureOne credit cardholder from California who claims to have been surprised to find that the defendant had charged her a cash advance fee, plus interest, when she paid her beauty technician via Venmo in February 2024. According to the case, the unexpected fee stemmed from Capital One’s “secret” policy decision to treat certain purchases as “cash equivalents,” even when they’re not equivalent to cash at all.  

“Indeed, the Bank assesses such fees on transactions that are not close equivalents to cash and that totally lack cash’s essential characteristic as a fungible method of payment,” the suit contends.

The complaint further claims that Capital One fails to disclose its “true practice” of categorizing non-cash advance transactions as worthy of cash advance fees.

Instead, the filing contends, the defendant merely states in its cardholder agreement that it will charge a cash advance fee—which amounts to either $5 or five percent of the credit card purchase, whichever is greater—on “a loan in cash or things we consider cash equivalents, including wire transfers, travelers’ checks, money orders, foreign currency, lottery tickets, gaming chips, and wagers.”

Notably, Capital One does not include payments made on peer-to-peer mobile applications in its definition of cash advances, the suit states.

The case argues that Capital One’s imposition of cash advance fees on transactions that are not reasonably considered an advance of cash is deceptive and a breach of its contractual promises to cardholders.

“The distinction between a purchase and a cash advance is crucial and can mean a difference in interest and fees of tens or hundreds of dollars on a purchase,” the lawsuit says. “For example, if a $100 purchase were instead treated as a ‘cash advance’ by Capital One, the transaction would come with a $5 advance fee and over $8 in immediately-accruing interest—both of which would not be charged otherwise.”

The lawsuit looks to represent any Capital One credit cardholders who, during the applicable statute of limitations period, were charged cash advance fees on transactions other than for a loan in cash, wire transfers, travelers’ checks, money orders, foreign currency, lottery tickets, gaming chips or wagers.

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