Retailers Charging for Cashback Requests: Major Companies Accused by Federal Authority of Demanding Payment for Own Money Returns
Using your provided text as a baseline, I'll try to rephrase it without adding any personal opinions or additional information:
It could potentially save you time because you won't need to visit an ATM. Furthermore, it might help you avoid paying higher, out-of-network withdrawal fees if your bank's machines are not nearby. Bankrate has revealed that the average combined cost of these out-of-network withdrawal fees, which consists of the ATM owner's fee and your bank's fee, has hit an all-time high of $4.77.
However, the fees some stores charge for providing cash back could accumulate over time if you frequently use this service. Those living in areas with limited or no banking facilities might not have an alternative, according to a recent examination by the Consumer Financial Protection Bureau (CFPB).
The CFPB looked into the policies of eight major retailers as a representative sample: two dollar stores (Dollar General and Dollar Tree), two grocers (Kroger and Albertsons), two drugstores (Walgreens and CVS) and two discount stores (Walmart and Target).
The CFPB discovered that three of these retailers, along with several of their affiliated brands, do levy fees for their cash-back services: Dollar Tree, Dollar General, and Kroger. The CFPB estimates that yearly, customers may pay $90 million in cash-back fees across these three retailers.
For example, the CFPB identified that Dollar Tree charges consumers $1 for cash back at its Dollar Tree stores and $1.50 in its Family Dollar stores.
Dollar General imposes fees between $1 to $2.50, depending on the withdrawal amount and various factors.
Kroger has different tiers for its fees at various brands, depending on the withdrawal amount: $0.50 for amounts of $100 or less, and $3.50 for larger amounts up to $300, the CFPB stated. One of its brands, Harris Teeter, started charging cash-back fees this year: $0.75 for amounts of $100 or less; $3 for amounts up to $200, said the CFPB and a report in the Charlotte Observer.
None of the companies responded to CNN's request to verify these fees.
Economically vulnerable families might be affected the most
The CFPB does not regulate retailers. However, it does have supervisory authority over providers of various financial products and services, such as most banks and credit unions. The survey aimed at retailers' cash-back fee policies was initiated to identify those who might have limited options to pay cash-back fees due to restricted access to financial services.
“The geographic distribution of dollar store chains and their primary consumer base raises concerns that these fees may be borne by economically vulnerable populations and those with limited banking access,” the CFPB noted in its report. Dollar stores are prevalent in rural communities, low-income communities, and communities of color, which are often the same communities that may also struggle to access banking services.
Since the retailers enforce relatively low withdrawal limits, you might need to pay multiple fees to obtain the required cash. For instance, if the fee for withdrawing $50 is $2, you will pay $4 to withdraw $100, plus the cost of purchasing something just to access the cash-back service.
According to the CFPB, “Among the merchants sampled, Dollar General and Dollar Tree charge the highest fees for withdrawal amounts under $50. These fees, along with the limited withdrawal amount, may mean that the fee takes up a considerable percentage relative to the withdrawn amount, and people may struggle to limit the impact of the fee by withdrawing more cash.”
As of now, the CFPB has previously tackled topics related to 'banking deserts' or 'near banking deserts.' Going forward, it will keep monitoring changes in fees consumers pay for accessing cash and the underlying reasons for the insufficient availability of cash from banks and credit unions across the nation at reasonable prices.
Utilizing online banking services or using a debit card with a business that offers no-fee cash withdrawals could potentially alleviate these fees for some individuals. Businesses should consider offering cashback services without fees to cater to their customer base, especially those living in economically vulnerable areas.
