Dollar General, Dollar Tree and Kroger are making an estimated combined total of $90 million a year in cash-back fees from customers, according to new findings from the Consumer Financial Protection Bureau (CFPB).
These three retail giants were found to charge customers between $0.50 and $3.50 for cash-back on purchases.
The findings were revealed as part of the government watchdog’s Offices of Consumer Populations and Markets investigation into cash-back fees.
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While retailers offer cash-back as a way of attracting customers, the CFPB observed that Dollar General, Dollar Tree and Kroger stores charged for the service.
Other stores, such as Walmart and Target, offer cash-back to customers for free.
The study noted that the “marginal cost to merchants for processing each transaction may be a few pennies, compared to the much higher fees charged by these retailers to consumers”.
It also found that these fees are more likely to impact Americans with lower incomes, raising “concerns” that they are being “borne by economically vulnerable populations and those with limited banking access”.
“Dollar stores are frequently located in small rural towns, communities of color, and low-income communities,” the CFPB said.
“These areas are also more likely to be places where there are fewer branch locations, and communities where people are more reliant on cash for daily transactions than others.”
Dollar Tree stores were found to charge $1 for cash-back while its Family Dollar stores charge $1.50.
Dollar General charges between $1 and $2.50 depending on the amount of cash, while Kroger stores (including Kroger and Ralph’s) charge $0.50 for up to $100 of cash and $3.50 for larger amounts up to $300.
“Access to cash is a necessary component of a resilient financial system and dynamic economy,” the CFPB said.
“Fees for cash back may serve as a barrier and reduce people’s access to cash when they need it.
“The CFPB will continue to monitor developments related to the fees consumers pay for accessing cash, and the underlying failure of banks and credit unions to adequately supply cash throughout the country in an affordable manner.”
