By Paige Smith | Bloomberg
Three major retailers — Dollar General Corp., Dollar Tree Inc. and Kroger Co. — charge consumers more than $90 million annually via “cash-back” fees charged to access their own funds at a register, a US financial watchdog found.
While the cost to merchants for processing cash-back transactions “may be a few pennies,” fees passed on to consumers are often far higher, the Consumer Financial Protection Bureau said in a report made public Tuesday. Among the examples highlighted were Dollar General and Dollar Tree, which charge $1 or more when customers withdraw less than $50 in cash.
People living in rural communities or those without nearby bank branches commonly turn to retailers to get cash. Nearly 19 million people in the US were “underbanked” in 2021, according to the Federal Deposit Insurance Corp. The CFPB said cash is more often used by low-income consumers, racial minorities and older people.
“Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free,” CFPB Director Rohit Chopra said in a statement. “This has created the competitive conditions for retailers to charge fees for cash back.”
Representatives for Dollar General, Dollar Tree and Kroger didn’t immediately respond to requests for comment on the CFPB’s findings.
The Biden administration has been targeting charges added to consumers’ everyday purchases, labeling many of them “junk fees.” The CFPB has worked with the White House on the issue, in addition to the Federal Trade Commission and the Department of Transportation.
The CFPB said it also surveyed the retailers Albertsons, Walgreens Boots Alliance, CVS Health, Walmart and Target and found none of them charge cash-back fees.
