In a groundbreaking study, popular dollar stores and a major national grocery chain have been found to charge customers for cash back services, revealing a significant discrepancy between retailers. Dollar General, Dollar Tree, and Kroger impose fees on customers who request cash back after making a purchase, while competitors such as Walmart, Albertsons, and Target offer the service for free.

According to estimates from the Consumer Financial Protection Bureau (CFPB), customers across these three major retailers pay a staggering $90 million in cash back fees each year. The CFPB's findings also indicate that Americans with lower incomes or limited access to local banking options are predominantly burdened by these charges, potentially impacting vulnerable families the hardest.

One concern raised by the CFPB is the prevalence of dollar stores in small rural towns, which often have fewer branch locations where residents can access cash for free. With their frequent restriction to low-income communities and communities of color, dollar stores' geographic distribution raises concerns about economically vulnerable populations and limited banking access, the watchdog warned.

Consumers are usually offered the option to obtain cash back when making a purchase using a debit or prepaid card at certain stores. At Dollar Tree, which operates a whopping 16,278 stores nationwide, customers are charged $1 for cash back at their Dollar Tree branded stores. Meanwhile, at Family Dollar, a subsidiary of Dollar Tree, the fee rises to $1.50.

Dollar General, boasting over 20,000 locations, charges customers between $1 and $2.50 depending on the cash withdrawal amount and other variables. Similarly, Kroger charges varying fees depending on the withdrawal amount at multiple brands, including Kroger, Ralph's, and Pick 'n Save. The CFPB identified charges of $0.50 for $100 or less in cash and $3.50 for larger amounts up to $300. This year, Kroger also introduced cash back fees at Harris Teeter, charging $0.75 for amounts of $100 or less and $3 for up to $200 in cash.

The CFPB estimates that the costs for managing cash back transactions are significantly lower than the fees customers are required to pay. The agency conducted this study to determine which individuals are most constrained in terms of accessing cash without incurring additional fees.

As banks continue to close branches across the United States, limiting access to free cash withdrawals at ATMs, the burden on customers who require cash back is exacerbated. Dollar Tree, Dollar General, and Kroger, with their varying fee structures and mini-max withdrawal limits, often force customers to incur fees multiple times to access the necessary amount of cash. For example, at Dollar Tree, if there is a $1 fee to withdraw $50, customers would have to pay $2 to withdraw $100, in addition to the cost of their purchases.

The CFPB highlights that Dollar General and Dollar Tree charge the highest fees for amounts under $50, which, combined with the restricted withdrawal amount, can have a significant impact on customers. This can make it more challenging for individuals to mitigate the financial impact of these fees by withdrawing larger sums of cash.

The study's results shed light on the need for greater accessibility to free cash withdrawals, particularly in economically vulnerable communities. Addressing these disparities will require collaboration between retailers, financial institutions, and regulatory authorities to ensure fair and equitable access to cash for all consumers.