Retail Giants Hit Shoppers By Charging for a Once-Free Perk
In a troubling development for consumers, three major retailers—Dollar General, Dollar Tree, and Kroger—have introduced new fees for a service that was previously free: cash back on purchases. This move has sparked outrage among shoppers who view it as another way for big stores to squeeze more money from their customers.
A recent study reveals that these retailers are now charging between 50 cents and $3.50 for cash-back transactions. The fee varies depending on the store and the amount of cash withdrawn. This contrasts sharply with competitors like Walmart, Albertsons, and Target, which continue to offer cash back at no charge.
This fee hike has been met with frustration from customers, especially those who rely heavily on dollar stores. A Reddit user expressed their discontent, stating, “Charging for cash back preys on shoppers, particularly those who may not have the means to drive to a bank ATM to avoid these fees.” This sentiment highlights a growing concern that these fees disproportionately affect low-income individuals and families who frequent these stores out of necessity.
According to the Consumer Financial Protection Bureau (CFPB), these fees add up to a staggering $90 million annually across the three chains. The CFPB’s findings underscore that Americans with lower incomes or limited access to local banking services are more likely to be burdened by these fees.
Dollar stores, often located in small rural towns with limited banking facilities, are particularly impactful. The CFPB notes that residents in these areas may find it challenging to access free cash withdrawals, making them more susceptible to the additional costs imposed by these retailers.
Here’s a breakdown of the new fees:
- Dollar Tree: With 16,278 stores nationwide, Dollar Tree charges $1 for cash back at its Dollar Tree-branded locations and $1.50 at Family Dollar stores.
- Dollar General: Operating over 20,000 locations, Dollar General imposes fees ranging from $1 to $2.50, depending on the amount of cash requested and other variables.
- Kroger: The grocery chain, which operates under various brand names including Ralph’s and Pick ‘n Save, charges $0.50 for cash back up to $100 and $3.50 for amounts up to $300. Kroger’s Harris Teeter brand charges $0.75 for up to $100 and $3 for up to $200.
The CFPB’s report suggests that the costs associated with managing cash-back transactions are likely significantly lower than the fees being charged. This raises questions about the justification for these additional charges.
The geographic distribution of dollar stores and their customer base is particularly concerning. The CFPB highlights that dollar stores are prevalent in rural, low-income, and minority communities—areas that often face challenges in accessing traditional banking services. By imposing these fees, the retailers are placing an additional financial burden on some of the most economically vulnerable populations.
Furthermore, local bank branches are closing across the U.S., reducing the availability of free ATM services. The retailers’ low limits on cash withdrawals exacerbate the problem. For instance, if a $1 fee is applied to a $50 cash-back request at Dollar Tree, a customer would pay $2 to withdraw $100, plus the cost of their purchase, to access the cash-back service.
The CFPB’s report indicates that Dollar General and Dollar Tree impose the highest fees for withdrawal amounts under $50. These fees, combined with the limited withdrawal amounts, mean that the cost can represent a significant percentage of the cash withdrawn, making it more difficult for consumers to mitigate the impact by withdrawing larger sums.
In summary, the shift by Dollar General, Dollar Tree, and Kroger to charge for cash-back services is seen by many as a predatory move that targets vulnerable consumers. While these retailers may argue that the fees are necessary to cover operational costs, the growing backlash suggests that the new charges are fueling consumer frustration and raising broader concerns about fair pricing practices in the retail industry.
