Minnesota Attorney General Mike Hatch sued Capital One in state court on December 30, 2004, alleging false advertising.
Capital One's TV and mail advertising prominently features "low and fixed" interest rates as an inducement for consumers to switch balances from other credit cards. In fact, however, Capital One reserves the right to raise rates at any time and also will increase rates for late payments and negative credit reports. Consequently, the supposed "fixed rates" are in reality not fixed. The disclaimers are in tiny type not readily discernible by the consumer.
"It's very clear that these ads are designed for the sole purpose of getting people to believe that the rate is fixed and it can't change. It's consumer fraud." —Mike Hatch
The suit describes in detail Capital One's TV ads which compare itself favorably to supposed predatory competitors who raise rates unpredictably. Capital One, Attorney General Hatch alleges, does the same thing. He seeks an injunction and restitution.