Law 360’s March 7, 2024 article sheds light on the class action lawsuit initiated by Wolf Popper against Axos Bank in the Southern District of California. The complaint, extensively referenced in the article, centers on the accusation that the bank covertly reclassified its customers’ high-yield money market accounts into lower-yield investment accounts without providing adequate notification. The case represents a proposed class of customers who have maintained money market accounts with Axos Bank, doing business as UFB Direct, since March 2022.
The article thoroughly explores the key points of the complaint, highlighting the contention that, amid the rise in market interest rates beginning in 2022, UFB took advantage of customers by “furtively creating new, similarly named money market accounts with higher rates, while leaving existing customers in so-called ‘legacy’ accounts with lower rates.” Describing UFB’s tactics as a “shell game,” the complaint alleges that UFB created “several functionally identical accounts with minimally different names, each with a stepped-up interest rate from the previous version.” Furthermore, the complaint asserts that with the introduction of each new money market account, UFB synchronized the advertised annual percentage yield with the escalating federal funds rate.
The article underscores the complaint’s allegations that UFB failed to inform account holders about the availability of a new money market account and neglected to clarify that the advertised account, which offered a higher interest rate, was distinct from their existing one. Consequently, existing money market customers were allegedly left in lower-yield accounts.
According to the complaint, the plaintiff opened a UFB money market account in April 2023 when the advertised annual percentage yield was 5.02%. Despite UFB’s representation of a variable interest rate, the complaint alleges that throughout 2023, UFB capped the APY on the plaintiff's account at 5.02% and then reduced it to 4.67% in September 2023. Simultaneously, UFB actively promoted other money market accounts with an APY of 5.25%.
The suit seeks damages, disgorgement, restitution, attorney fees and a jury trial.
The case is Pliszka v. Axos Bank, case number 3:24-cv-00445, in the U.S. District Court for the Southern District of California.
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