RSSKroger, Dollar Tree/Family Dollar and Dollar General collected $90 million in fees from customers requesting cash back while using a debit or credit card, according to an Aug. 27 report from the Consumer Financial Protection Bureau.
Of the eight large retailers the bureau reviewed, the trio reportedly charged the most cash back fees for small withdrawals — a $1 fee or more for cash-back amounts under $50.
“Consumers with lower incomes or fewer banking choices encounter cash-back fees disproportionately,” according to the bureau. “Dollar stores are frequently in small, rural towns, communities of color and low-income communities. These areas are also more likely to have fewer bank branch locations and more residents reliant on cash for daily transactions than others.”
The report was released as Kroger, the nation’s largest grocery chain, plans to charge customers 75 cents for $100 cash back or less. The retailer currently charges 50 cents for up to $100 cash back at their other brand stores.
Many merchants allegedly pre-determine withdrawal amount options in a single transaction, usually between $5 and $50. Implementing a fee on small transactions could take up a significant percentage of the overall amount and cause repeat withdrawals, according to the CFPB, with consumers having a new fee each time.
“The CFPB also estimates that the marginal cost to merchants for processing each transaction may be a few pennies, compared to the much higher fees these retailers charge consumers,” according to the report.
