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The CFPB said Tuesday that Kroger Co. and two major discount retail companies levy fees against consumers when they withdraw cash during transactions using their debit or prepaid cards.
The federal agency said it observed that Kroger Co., Dollar General and Dollar Tree Inc impose “cash-back” fees on customers at their respective brands as part of a larger CFPB report looking at the practices of eight big retailers.
The CFPB said it did the analysis of eight retailers’ “cash-back” fee policies “to establish a baseline” because there was a lack of publicly available data about “cash-back” fees.
A Kroger grocery store in Dallas, Texas, US, on Wednesday, Feb. 21, 2024. The US Federal Trade Commission and a group of states are poised to sue as soon as next week to block the tie-up between supermarket giants Kroger Co. and Albertsons Cos., acco (Shelby Tauber/Bloomberg via Getty Images / Getty Images)
The Kroger Co.’s fee for customers to get “cash back” during transactions using their debit or prepaid cards amounted to 75 cents for retrieving less than $100 and $3 for more than $100 at Harris Teeter stores, according to the CFPB. At for its other brands, CFPB found it was $50 cents for less than $100 and $3.50 for above that.
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Meanwhile, Dollar General has a $1 to $2.50 fee for getting cash at the register “depending on amount and other variables,” the agency said.
The CFPB said customers who get cash at Dollar Tree face a $1 fee for the service. The company also owns Family Dollar, where the agency pegged the fee at $1.50.
The collective amount that the three companies charge in “cash back” fees totals an estimated $90 million annually, according to the CFPB.
A Dollar General store in Kingston, New York, US, Thursday, Nov. 30, 2023. Dollar General Corp. is scheduled to release earnings figures on December 7. Photographer: Angus Mordant/Bloomberg via Getty Images (Angus Mordant/Bloomberg via Getty Images / Getty Images)
“While not a financial institution, Dollar General provides cashback options at our more than 20,000 stores across the country as a service to customers who may not have convenient access to their primary financial institution,” Dollar General told FOX Business. “These services may also help customers save money on fees compared to alternative, non-retail options such as check cashing locations or ATM fees.”
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FOX Business also reached out to Kroger and Dollar Tree for comment.
CFPB reported Albertsons, Walmart, Target, Walgreens and CVS — the five other companies whose “cash-back” practices it looked at — let customers withdraw cash during transactions without incurring a fee, the agency said.
A sign is posted in front of a Dollar Tree and Family Dollar store on March 13, 2024 in Rio Vista, California. Dollar Tree announced plans to close nearly 1,000 of its underperforming Family Dollar stores across the U.S. (Getty Images / Getty Images)
The agency also noted it has “observed that many local independent grocers offer the service, but do not charge a fee” for “cash back.” People can get “cash back” using their debit card at U.S. Postal Service locations too.
The cash-back fees charged at some retailers come “against the backdrop of bank mergers, branch closures, and prevalence of out-of-network ATM fees that have reduced the supply of free cash access points for consumers,” the CFPB said. The agency suggested the “marginal cost” that merchants see for “cash back” transaction processing could be very small “compared to the much higher fees these retailers charge consumers.”
“Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free. This has created the competitive conditions for retailers to charge fees for cash back,” CFPB Director Rohit Chopra said.
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Getting “cash back” at stores is one of the most popular ways for people to retrieve money.
People used retail point-of-sale transactions to pull cash from their checking account, savings account or prepaid card 17% of the time from 2017 to 2022, according to the CFPB.
ATMs, meanwhile, accounted for 61% of checking account, savings account or prepaid card withdrawals, the agency found.
