Class Action Lawsuit Alleges Capital One Wrongfully Denies Rewards When Closing Credit Card Accounts

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A proposed class action lawsuit claims that Capital One wrongfully closes certain credit card accounts and retains the rewards earned on those accounts pursuant to an undisclosed rewards cancellation policy even when the cardholder is not at fault, such as when a card has been subject to fraud or unauthorized use.

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The 49-page breach-of-contract lawsuit contends that Capital One has profited substantially from the wrongful closure of credit card accounts based solely on suspected fraud or activity the financial corporation deems “inconsistent with typical customer account usage.” Should such a card account closure occur, consumers are given neither prior notice nor any meaningful opportunity to undo or challenge the closure, or a reasonable opportunity to redeem the awards once their account is closed, the case alleges.

The complaint further claims that Capital One, one of the largest credit card issuers nationwide, retains merchant processing fees tied to rewards-generating purchases, even when the rewards are later denied to cardholders.

The suit stresses that unredeemed credit card rewards may be lost only when a Capital One cardholder closes their account.

“There is no provision allowing the loss of unredeemed rewards when Capital One closes an account for a cardholder who is not in default,” the lawsuit says.

Capital One offers at least 31 rewards credit cards that include varying cash-back, mileage, or points-based rewards that accrue based on purchases, the case explains.

Capital One repeatedly promises in promotional materials, user agreements and its terms and conditions that these rewards are redeemable within 90 days from the date a purchase posts to a cardholder’s account, the case says. The lawsuit highlights that consumers reasonably rely on these representations when deciding whether to open an account with the bank.

Related Reading: Capital One Failed to Specify Why It Closed Certain Consumer Credit Accounts, Class Action Alleges

The lawsuit argues that thousands nationwide have been denied earned credit card rewards after Capital One closed their accounts, even when the cardholders followed the terms of their agreements and were in good financial standing.

According to the complaint, the plaintiff opened a Capital One Spark Cash Plus rewards credit card in September 2024. The card offered two percent unlimited cash back on purchases, a $2,000 bonus after spending $30,000 in the first three months, and an additional $2,000 bonus for every $500,000 spent in the first year. The card also carried a $150 annual fee, which was to be reimbursed if $150,000 was spent within the year, the suit says.

The plaintiff claims that he received account statements from Capital One each month he had the card, along with notices as certain bonus thresholds were reached.

Per the case, the last Spend Bonus reward email the plaintiffs received from Capital One was in June 2025, confirming they earned Spend Bonus rewards totaling $8,000. However, on July 21, 2025, Capital One closed the plaintiffs’ Spark Cash Plus account with no prior notice, purportedly due to activity “inconsistent with typical customer account usage,” the suit says.

As a result of the closure, the plaintiff’s account was left with a zero-rewards balance, and the man was never issued his earned benefits, e.g., the $150 annual bonus, $8,000 spend bonus and nearly $2,500 in two-percent rewards, the case alleges. According to the complaint, Capital One has refused to pay the plaintiffs the $8,000 they are owed in rewards and their earned two percent purchase rewards, $2,437.39, for the period of around July 21 to August 1, 2025.

The lawsuit asserts that the failure to provide earned rewards is a “nationwide problem” as identified by federal regulators. For instance, the Consumer Financial Protection Bureau has warned that “large credit card issuers too often play a shell game … boosting their own profits while denying consumers the rewards they’ve earned,” the filing says.

The complaint also points to legislation such as the Equal Credit Opportunity Act (ECOA),  which requires lenders to provide a specific explanation when taking adverse action against consumers when their credit status is deficient so as to allow them to take steps to improve it.

Similarly, the New York General Business Law covers rewards earned by New Yorkers within 90 days of account cancellation.

Because Capital One allegedly failed to provide specific reasoning beyond vague references to “typical customer account usage,” the bank deprived cardholders of the financial benefits they were contractually promised, the class action lawsuit says.

Furthermore, even if the plaintiff was in default, which he was not, Capital One was not permitted to “unilaterally forfeit [the plaintiff’s] earned rewards,” the suit adds.

The Capital One rewards class action lawsuit seeks to represent all individuals or entities for whom Capital One closed a credit card account when the cardholder was not in default, and who did not receive payment or redemption of rewards (as cash or mileage) based on their credit card purchases (the “refund class”).

The lawsuit also seeks to represent three subclasses, consisting of all members of the refund class who:

• Were issued a Capital One Spark Cash Plus credit card;
• Reside or made purchases with their Capital One credit cards in New York; and
• Whose credit card accounts were cancelled by Capital One for the stated reason that their account activity was “inconsistent with typical customer account usage.”

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