Scripps News Life

Actions

Cash-back fees at dollar stores and other retailers are steep, affect some communities disproportionately

What was once a free service, requesting cash back at the register while shopping at some retailers can trigger fees while competitors don't.
Cash-back fees at dollar retailers are affecting some communities disproportionately an analysis shows
Posted
and last updated

Cash-back fees at popular dollar stores are costing Americans millions according to a consumer report.

The Consumer Financial Protection Bureau said three retail companies: Dollar General, Dollar Tree, and Kroger, are charging these fees — the report found that other retailers examined in the report are not.

The brands which charge the fees also operate other brands including Family Dollar, Harris Teeter, Ralph’s, and others.

Dr. Rigoberto A. Lopez is an economics professor at the University of Connecticut who says these practices tend to affect lower income communities disproportionately because many dollar stores tend to be located in these communities.

RELATED STORY | Dollar store deals: Best things to buy there, and some things to skip

Lopez calls it a predatory practice because he says many of these communities where dollar stores are located tend not to have easy access to banks or other options for withdrawing a consumer's cash.

"The poor are paying more for their own cash," Lopez said. "Basically what it amounts to is a predatory practice."

"Of the percentage of the cash" customers are receiving or withdrawing, "it is a very high fee that nobody else is paying, no other Americans are paying," Lopez said. "So they're paying the highest fee for getting cash back, and we have to consider that getting cash from retailers is the second most common way of getting cash for consumers — the first one being ATMs, of course."

Lopez says a lot of consumers are starting to realize — he says especially those from the middle class — that "they're not really saving money," he said.