Kroger charges shoppers to access cash even as other major chains don’t, federal report says

Kroger is among a minority of large retailers under scrutiny by the Consumer Financial Protection Bureau that charge customers to withdraw cash when making purchases, according to a report released Tuesday by the federal agency.

The grocery chain’s banners are charging customers 50 cents or more each to withdraw up to $100, imposing additional costs on consumers at a time when mergers, closings and “fee hikes” in the financial services industry have made it difficult access to people. cash from their accounts without incurring a fee, according to the CFPB, which monitors markets for consumer financial products.

“In this context, we note that some retailers offer cash back as a useful service to their customers, while other retailers may exploit these conditions by charging their consumers to access their cash,” the agency said.

According to the report, data analyzed by the CFPB shows that retail locations accounted for 17 percent of all transactions where people withdrew cash from checking or savings accounts or using prepaid cards.

Examining a sample of eight national chains, the CFPB found that three — Kroger, Dollar General and Dollar Tree — charge chargeback fees that the agency estimates bring in more than $90 million a year. Companies charge these fees even though the cost they incur to handle each transaction may be just a few cents, the agency said.

The CFPB noted that Dollar General and Dollar Tree have a large presence in rural and low-income areas and communities of color — places where the agency said banks have fewer branches and people depend more on cash for everyday needs. day.

“Retailers essentially fill a gap in access to cash that has historically been provided by banks and credit unions in an affordable way,” the agency said in the report, adding that access can be particularly useful for people in underbanked areas where financial institutions and ATM operators charge “significant” fees.

Retailers benefit from offering cash-back services because they save money by having less cash at the end of the day to count, according to a 2002 Federal Reserve Bank of Philadelphia report cited by the CFPB. Cash-back services can also draw shoppers into stores, the agency said.

The CFPB also reviewed data on cash-back transactions at stores operated by Albertsons, Walgreens, CVS, Walmart and Target, noting that those retailers do not charge cash-back fees. Many independent grocers and the U.S. Postal Service also allow customers to withdraw cash without incurring a fee, according to the report.

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