Popular dollar stores and a major national grocery chain are charging customers to get cash back when they make a purchase, a milestone study has revealed.
Dollar General, Dollar Tree and Kroger all charge for their cash back service, even though competitors like Walmart, Albertsons and Target offer it for free.
At the three major retailers, customers pay $90 million a year in cash-back fees, according to estimates by the Consumer Financial Protection Bureau.
The CFPB found that Americans with lower incomes or fewer local banking options are more likely to have to pay these fees, meaning vulnerable families may be hit hardest.
Dollar stores in particular tend to be located in small, rural towns often with fewer branches where residents can withdraw cash for free, the watchdog warned.
Popular dollar stores and a major national supermarket chain are charging customers to get cash back when they make a purchase, a landmark study found
Consumers can earn cash back when they make a purchase at certain stores using a debit or prepaid card at the register.
Buyers typically have to choose from preset withdrawal amount options that are presented at the payment terminal at the time they make a transaction.
The CFPB found that Dollar Tree, which has 16,278 stores across the United States, charges $1 for cash back at its Dollar Tree-branded stores.
Meanwhile, Family Dollar charges $1.50 in its stores.
Dollar General, which has more than 20,000 branches, charges between $1 and $2.50 depending on how much cash a customer wants and other variables.
Kroger charges different fees depending on the amount of the pickup at many of its brands, including Kroger, Ralph’s and Pick ‘n Save.
According to the CFPB, brands make consumers pay $0.50 for $100 or less in cash, and $3.50 for larger amounts up to $300.
The company also began charging shoppers for cash back this year at another of its brands, Harris Teeter, where it charges $0.75 for amounts of $100 or less and $3 for up to $200 in cash.
The watchdog estimates that the costs paid by retailers to manage the cashback transaction are likely to be much lower than the fees customers have to pay. CNN reported.
The survey was conducted to determine who may have fewer options when it comes to shelling out cashback fees because they are limited in where they can withdraw cash.
“The geographic distribution of dollar store chains and their primary consumer base raise concerns that these charges may be borne by economically vulnerable populations and those with limited banking access,” the agency said.
‘Dollar stores are prevalent in rural communities, low-income communities, and communities of color — the same communities that may also face challenges accessing banking services.’
While Americans can generally withdraw cash for free at an ATM owned by their own bank, local branches are closing across the United States.
The CFPB found that Dollar Tree, which has 16,278 stores across the United States, charges $1 for cash back at its Dollar Tree-branded stores.
Dollar General stores charge between $1 and $2.50 depending on the amount of cash the customer wants and other variables, with a maximum of $40 per transaction.
Kroger charges different fees depending on the pickup amount at many of its brands, including Kroger, Ralph’s and Pick ‘n Save.
Retailers also set low limits on the amount of cash people can retrieve at a time, so they may have to pay the fees more than once to get the money they need.
For example, if there is a $1 fee to retrieve $50, as is the case at Dollar Tree, you will pay $2 to withdraw $100, in addition to the cost of what you are purchasing to gain access to the cash back service.
“Among the sampled merchants, Dollar General and Dollar Tree charged the highest fees for withdrawal amounts under $50,” the CFPB added.
‘These fees combined with the limited withdrawal amount may mean that the fee takes up a significant percentage relative to the amount of cash withdrawn, and people may be less able to limit the impact of the fee by withdrawing more cash.’