Dollar General, Dollar Tree, Kroger Charge Millions in ‘Cash Back’ Fees: How They Do It

If you’ve ever opted for a “cash back” debit card purchase at Dollar General or Dollar Tree, you may have been hit with an unnecessary fee. The Consumer Financial Protection Bureau (CFPB) found that the brands — along with Kroger grocery stores — collect more than $90 million in fees each year when customers ask for access to cash.

“(The) three largest companies charge fees for cash back even though other competitors offer them for free,” the CFPB noted in a recent report.

The CFPB findings show that cashback fees for small withdrawals are highest at dollar-store corporations — $1 or more for amounts under $50 — while at Kroger, the nation’s largest grocery chain, customers pay $0.75 for amounts up to $100.

While all merchants charge a fee for cash transactions made with a debit card — ranging from 5 to 20 cents depending on the transaction amount — Dollar Tree, Dollar General and Kroger are the only companies in the study that pass the fee on to consumers.

“All retailers in our sample offer cash-back services, but only Dollar General, Dollar Tree Inc., and Kroger Co. charge a fee,” the CFPB said, noting that Walmart, Target, CVS, and Walgreens offer the service free of charge. “Other retailers offer cash-back free of charge, even for payout amounts similar to or greater than those offered by the three retailers that charge a fee.”

The CFPB, however, found that charging fees for access to cash is abusive.

“While the use of digital payment methods is growing, the availability of cash remains a key component of a resilient financial infrastructure and a dynamic economy,” the report concluded. “In this context, we note that some retailers offer cashback to their customers as a helpful service, while other retailers may exploit these terms by charging their customers for access to cash.”

However, the Dollar Tree brand claims the fee is justified.

“Like many retailers, Dollar Tree and Family Dollar offer cash back as a convenient service to our customers,” a company spokesperson noted in a statement. “Shoppers who wish to take advantage of our cash back offer are charged a clearly disclosed fee, which in turn helps offset the variety of costs we incur to offer this helpful service.”