Consumer complaint received 2024-03-26 00:00:00
Product: Credit card — General-purpose credit card or charge card
Issue: Closing your account — Company closed your account
Company: CAPITAL ONE FINANCIAL CORPORATION
State: FL

Complaint narrative:
I am writing to declare that I am the beneficial owner and accommodating party of the instruments and account receivable sold to the Capital One Master Trust for the creation of securities-debentures, as described in the receivable purchase agreement ( Capital One Financial Corporation , XXXX  ), and outlined in the XXXX XXXX XXXX XXXX prospectus ( XXXX XXXX XXXX  ), identifies me as the investor and the beneficial owner. These documents, including the associated XXXX ( Capital One Financial Corporation, XXXX  ) and XXXX reports ( CAPITAL ONE MULTI ASSET EXECUTION TRUST, XXXX & CAPITAL ONE MASTER TRUST ), outline the obligations and rights linked to the debenture issuance and redemption.

A notice of redemption was sent to Capital One ( Redemption Notice, XXXX ), adhering to the terms stipulated in these agreements, requesting the payment and redemption of the endorsed debenture. Despite this, Capital One Finance

denied me my right to payment and redemption and unjustly closed my account, which was a breach of fiduciary duty. Equity dictates that the beneficiary is recognized as the true owner of any property, even in intangible forms, treating the legal title holder as merely a trustee. The Federal Reserve Act, specifically section 16, outlines the procedure and guarantees associated with federal reserve notes, and collateral securities, affirming that applications for such notes shall be approved for no less than the amount applied for, backed by the full faith
and credit of the United States ( Federal Reserve Act and National Bank Act, XXXX XXXX XXXX XXXX XXXX XXXX ). My letter of instruction and notice of billing error and subrogation ( Private & Confidential, XXXX  ) to Capital One, referencing the restrictive endorsements as outlined in their agreement ( Capital One N.A., XXXX ), emphasized my right to the debentures redemption and the associated account 's equitable interest. 

Capital One 's subsequent response to my assertion of rights, baselessly cites first-party fraud and that adverse action was taken by closing my account as a fiduciary ( Capital One, XXXX ), this conflict of interest further violates the Fair Credit Billing Act ( FCBA ) provisions, which safeguard consumers against unfair billing practices and assure the correction of billing errors ( Fair Credit Billing Act, 1974 ). 

Capital One 's Terms and Agreements on Restrictive Endorsements and Its Implications Capital One 's terms and agreement, as specified in the document ( Capital One, XXXX ), clearly state the procedure for handling items with restrictive words, conditions, or instructions. According to the agreement, any item bearing restrictive endorsements must be sent to a specified address for processing. This includes items marked " Paid in Full '' or with similar language, along with all accompanying communications. The agreement asserts that such items may be rejected and returned if not accepted, yet it also allows for their acceptance and processing without forfeiting any rights of Capital One.

In my case, the restrictive endorsed bearer debenturea bond and security that I possessed and endorsed for payment and redemptionwas not returned to me following submission. This absence of rejection and return implies, under the terms provided by Capital One itself, that the item has been processed and accepted. Importantly, the agreement lacks any provision stating that such items can be rejected without a formal return of the instrument with stamp tax duties affixed.

Furthermore, the enforcement of adverse actions based on the credit card terms and agreement raises significant legal concerns, particularly regarding the unauthorized practice of law by a corporation. The terms do not explicitly prohibit the redemption of my equitable interest for set-off and recoupment, suggesting that Capital One 's actions may contravene the outlined procedures and rights granted under these terms and equity.

Moreover, regulatory provisions, such as 31 CFR 328.4, clarify the effect of restrictive endorsements on bearer securities. According to this regulation, bearer securities bearing restrictive endorsements as provided will thereafter become nonnegotiable, with payment, redemption, or exchange to be conducted solely as outlined in such endorsements. This regulatory framework supports the position that my restrictive endorsed bearer debenture should be treated in accordance with the specific endorsements it bears, without deviation or unauthorized actions by Capital One.

Convertibility and Implications for Equitable Relief : 1. Federal Reserve 's Book-Entry System Evolution ( XXXX, XXXX ) : The transition from physical to book-entry form was a significant development aimed at reducing operational costs and risks while preserving market liquidity. This move to book-entry securities underscored the need for efficiency and security in managing Treasury securities , emphasizing a system where securities could be transferred without the physical movement of paper ( XXXX, XXXX ). 

2. Operational Circular No. 6 ( Federal Reserve Banks, XXXX ) : This circular, effective XX/XX/XXXX, lays out the framework for funds transfers through the Fedwire Funds Service. It details how financial institutions, as Fedwire Participants, are authorized to act on behalf of others in sending and receiving messages or securities messages, highlighting the structured and regulated environment within which book-entry securities operate. 3. Operational Circular No. 7 ( Federal Reserve Financial Services, XXXX ) : This document delves into book-entry securities account maintenance and transfer services, marking a significant step towards ensuring security and efficiency in the transfer and maintenance of securities in book-entry form. It specifies the roles of the Reserve Banks in book-entry securities transfers, execution of transfers, and the process for converting eligible definitive securities to book-entry form or vice versa.

Arguments for Equitable Relief : - Security and Efficiency : The adoption of book-entry securities, as highlighted by XXXX ( XXXX ), reflects a systemic preference for security and efficiency in the management of securities. This systemic preference underpins the need for equitable relief in cases where the system 's integrity is compromised, as in the denial of the right to redemption.

- Regulated Environment for Operations : Operational Circulars No. 6 and No. 7 from the Federal Reserve outline a highly regulated environment for the operation of book-entry securities. This regulated environment supports the argument for equitable relief, as it implies a breach of the systemic rules and regulations governing these securities ' management.

- Convertibility and Equitable Rights : The detailed provisions for the convertibility of securities between book-entry, bearer, and registered forms underscore the fundamental rights of securities holders. These provisions support the call for equitable relief, as they indicate that the system is designed to respect and uphold the rights and interests of securities holders, including the right to redemption.

In conclusion, the systemic design for the management and transfer of book-entry securities, as evidenced by Federal Reserve publications and operating circulars, provides a solid foundation for the argument for equitable relief. The denial of the right to redemption not only contravenes the specific agreements with Capital One but also undermines the broader systemic principles of security, efficiency, and the protection of holder rights within the U.S. Treasury market.

The implications of these terms and regulatory provisions are clear : Capital One 's failure to return the restrictive endorsed debenture indicates acceptance under its own agreement terms, and any subsequent adverse action lacks legal foundation within the stipulated agreement and regulatory guidelines. Consequently, this section reinforces the complaint for equitable relief, demanding adherence to the established terms and regulations governing such financial instruments and transactions. Under the duty of good faith and fair dealings, administrators and officers as Trustees must advance interests of the beneficiary and fulfill their duties without violating the law. Under the duty of prudence, a trustee must administer a trust with a degree of care, skill, and caution that a prudent trustee would exercise. The duty of Disclosure requires administrators to act with complete candor. In certain circumstances, this requires the officers as administrators to disclose to the beneficiaries all of the facts and circumstances relevant to the administrators ' decision. XXXX XXXX XXXX XXXX, XXXX XXXX XXXX ( XXXX ). 

I declare under a penalty of perjury that the foregoing statement is accurate and true.

Company response to consumer: Closed with explanation