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stacy mitchell
Report Exposes How Chains Like Dollar General Prey on the Poor With Cash-Back Fees
Dollar General, Dollar Tree, and Kroger rake in a combined $90 million a year from cash-back fees, according to a new report by the Consumer Financial Protection Bureau.
Aug 27, 2024
The Consumer Financial Protection Bureau published a report Tuesday highlighting how large retailers such as Dollar General and Kroger exploit low-income communities' lack of access to local banking to hit consumers with predatory cash-back fees.
The CFPB found that while many retailers still offer free cash back at the register, Dollar General, Dollar Tree, and Kroger collectively rake in $90 million a year from fees imposed on people using the retail locations to access their own money.
"At Dollar General and Dollar Tree/Family Dollar, cash-back fees for small withdrawal amounts are the highest in the sample ($1 fee or more for cash-back amounts under $50)," the bureau found. "Kroger, the country's largest grocery chain, recently announced new charges at their Harris Teeter stores (75 cents for $100 cash back or less), and charges 50 cents for up to $100 cash back at their other brand stores such as Ralph's, Fred Meyer, and others."
The CFPB emphasized that such fees are disproportionately levied against people with lower incomes, who are more likely to live in areas with fewer banking options—forcing residents to rely on dollar stores for easy access to cash. The report notes that banking industry consolidation and branch closures have left a "void" of cash access spots that retailers like Dollar General have rushed to fill.
"While retail chains had long provided cash back on debit card purchases for free, the CFPB has found that dollar store chains and other retailers are now charging fees for access to cash," Rohit Chopra, the CFPB's director, said in a statement Tuesday. "Many people living in small towns no longer have access to a local bank where they can withdraw money from their account for free. This has created the competitive conditions for retailers to charge fees for cash back."
"Dollar General alone chalked up gross profits of $11.82 billion in 2023. But they nonetheless find new ways to squeeze even more money from their shoppers."
Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance (ILSR), applauded the CFPB's new research as an "important report" that "exposes yet another way in which dollar stores' exploitative business practices take advantage of consumers."
"The three big dollar store chains make enormous profits," said Mitchell. "Dollar General alone chalked up gross profits of $11.82 billion in 2023. But they nonetheless find new ways to squeeze even more money from their shoppers—in this case, by charging them a few dollars to get cash back on their transactions, which average only a modest $25 or so. All three major dollar store chains have been fined for overcharge errors, and all use their market muscle to force suppliers to create 'cheater' sizes for them. CFPB's report will help alert shoppers to these abusive retailing practices."
ILSR has long worked to shine light on the abuses of dollar stores, releasing a report last year detailing how the retailers have invaded low-income communities and preyed on vulnerable consumers as well as workers.
"One might assume that the dollar chains are simply filling a need, providing basic retail options in cash-strapped communities. But the evidence shows something else," reads ILSR's report. "These stores aren't merely a byproduct of economic distress, they are a cause of it."
"In small towns and urban neighborhoods alike," the report adds, "dollar stores drive grocery stores and other retailers out of business, leave more people without access to fresh food, extract wealth from local economies, sow crime and violence, and further erode the prospects of the communities they target."
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It's Prime Time to Boycott Amazon
Pledge to boycott Amazon today. Then get what you need from Prime Day
Jul 14, 2019
Are you ready to divest from Amazon Prime? How about Whole Foods?
If the idea makes you break into a nervous cold sweat, no worries. You don't need to divest from either.
Yet.
That's the idea behind non-profit Threshold's new campaign, Cancel Prime.
The idea is for people to pledge to cancel their Prime accounts and stop shopping at Whole Foods--when there is a critical mass of people who will divest together.
"It's a way for people to take collective action, so that it will likely work," says Kipchoge Spencer, Threshold's founder.
Founded in August 2018, Threshold has developed a platform that enables people to pledge to take action, and, when enough people pledge, calls upon them to take action.
When a mass of consumers quit Amazon and its subsidiaries together, Amazon will notice--and, perhaps, pay attention to some consumer-demanded changes.
Think of it as a potentially effective replacement for the lone boycott of a particular place, or for online activism that revolves around sharing petitions on Facebook, or airing and sharing daily grievances on Twitter as if every day were Festivus.
"Engaging in activism is so uninspiring and disempowering" these days, says Spencer. "I think there's this common format with digital activism, which starts with a petition designed to get you angry or sad or donate money. And it's effective to some degree to build organizational power, to build mailing lists. But it's cynical because those petitions almost always fail."
Inspired by the progressive issues of the day receiving support--but not much action--Spencer came up with the Threshold strategy. "More than 50 percent of people think we should do something about climate change, but I wondered why we aren't able to achieve something supported by the majority of people, especially in a democracy. We wanted to develop a way that would motivate people more and more by inspiration, that this is probably going to work," says Spencer.
Spencer suggests one of the reasons more action isn't being taken on climate change is that the user experience of engaging in activism is "so uninspiring and disempowering, that it basically prevents a critical mass of people from taking action. People get burned out and turned off."
He uses the example of a petition you might receive from a friend, asking you to protest something the EPA is doing. There is a zero percent chance it will inspire change at the EPA, but you still sign, perhaps out of guilt--and that's your first disempowering action. You're never told it doesn't work, but you intuitively know it didn't. Worse, you're asked to spam your friends with it, which serves the organization's purpose to grow its mailing list, and spreads the disempowerment around.
"I don't want to be broadly critical of the progressive advocacy world, but this is a failure in the system, because people sign a petition, they feel bad, then they feel worse, and then they feel completely disempowered," says Spencer.
Hence, Threshold, which doesn't ask you to do anything besides pledge--until a critical mass is reached. If a critical mass isn't reached, you're not asked to do anything.
"Many people love Amazon. It's revered," he concedes. "They use it all the time and depend on it. Asking them to quit is significant."
With the Cancel Prime campaign, you're not asked to "put any skin in the game, unless the game is likely to go your way," Spencer says. It's like "Kickstarter for activism."
What's really important, says Spencer, is for people to understand that when they're asked to make a sacrifice, it will work.
Much has been written about the ethical, environmental, and labor horrors of Amazon, and yet it maintains its hold over the lives of Americans. A big part of Cancel Prime is the education component--not just why to divest, but how to divest.
The "why" list is long, and might differ from person to person. Some people who might agree with the principles motivating Cancel Prime may still feel Amazon is a necessary part of their lives and there is no desire to divest. Spencer says, "that's okay. My perspective on activism isn't that we need to spend a lot of energy on convincing people. It's convincing people who already are convinced to take action collectively together."
For Spencer, among other reasons, Amazon is "morally offensive [because] they make so much money, and some of their workers are living in poverty, with widely reported medical issues that aren't treated well. You're one of the richest companies in the history of the universe. You won capitalism. Now start treating people well."
It's also appalling they pay no taxes, make $11 billion dollars, and get a tax rebate. "That seems pretty egregious," says Spencer.
Then there's Amazon's "support for infrastructure that supports ICE," which is currently separating children from their families in the ongoing immigration crackdown. "That just feels completely unconscionable," Spencer says. "It's getting uncomfortable to think I'm buying something from Amazon while they support the infrastructure of ICE. It's not just incidental, but it's critically important to ICE's mission. I think there's a place to take a stand there."
Amazon also clearly takes advantage of the public's goodwill to win tax breaks--just look at the massive data grab that the war for HQ2 created. "They should be positive forces in communities instead of wrecking them," says Spencer. "They have a big opportunity to be a global leader because of how much wealth they have."
What's more is Amazon has an opportunity to be a global leader around climate, energy, and plastics. But it's not. In fact, Amazon is not only failing to fulfill even a quarter of its renewable energy commitment, but actually growing in energy demand.
Over half of all U.S. households are Prime members--more than 100 million Americans. Amazon is also a big player in entertainment, with its hand in film, television and Twitch. Its fingers pull the strings of search engines, digital assistants, the cloud, logistics, pharmaceuticals, banking, fashion, Whole Foods, and real-world retail, in addition to tech and actual book sales (where Amazon got its start), and an overall, overwhelming share of e-commerce.
Considering their reach and wealth, there are countless things the company can do to have a positive climate impact instead of a negative one--yet it doesn't.
Meanwhile, Amazon keeps growing, aiming to be the infrastructure for all commerce as we know it. Stacy Mitchell at the Institute for Local Self-Reliance calls it the Amazon tax, where if you choose to buy through a third party, it's still through Amazon.
Amazon, Mitchell told Chris Hayes at NBC, is "like a gatekeeper. Essentially you've got to ride their rails to market. They can decide what the terms are, they can use the data they gather on what you're doing to out-compete you and to undermine you as a competitor. They can levy a kind of tax on your trade. Essentially what Jeff Bezos has set up by owning the pipelines ... It's not just the platform... by owning the pipelines, what Amazon can do is it can decide, okay, here are the most lucrative streams of consumer spending. Then, for all the other stuff in the economy that they don't really want to deal with or that isn't that profitable... let other sellers do that. [Amazon will] just levy a tax on their trade. Every transaction they do," says Mitchell, Amazon gets a cut. As Amazon's power grows, Amazon is going to get a bigger and bigger cut, she adds.
"That doesn't feel very safe to have a healthy economy," says Spencer.
Traditionally in the United States, we've valued competition.
Also traditionally, the United States has frowned upon the idea of one entity controlling everything in commerce. If it was the U.S. government, for example, that owned and operated all the platforms Amazon does, people would be outraged, perhaps even shouting words like "communists!" at the government. And yet, it might be argued that even communist countries don't rely on their governments as heavily as the U.S. consumer has come to rely on Amazon.
Which brings us to another point: Are we citizens first, or are we consumers first?
That might be yet another question America as a nation and as a people need to grapple with.
In the interim, if we do want to take action that Amazon will notice and perhaps even make changes for, the harmonization of consumer action might be key. But what's a consumer to do when their lives are so intertwined with Amazon's?
Threshold has a guide online to much of what Amazon owns and alternatives to each one. Some, arguably, have their shortcomings, but switching to them when the time is right might be worth it to make a point. (Spencer hopes this part of the campaign will be crowdsourced, for optimum impact both in terms of divestment from Amazon and reinvestment in healthy companies in line with individual values.)
"It only takes 3.5% of the population to make a change," says Spencer, referencing a study by Erica Chenoweth, of Harvard Kennedy School. "In every single instance, where it mobilized at least 3.5%, it won."
"That's one of the most inspiring pieces of data there is," he says. "We don't need 50%. We don't need 60%. We need 3.5%. Really, that's what it boils down to in our job as movement organizers. We're putting it out in front, because we think it's important for people to know."
When mass divestment from Amazon does occur, Spencer expects the company to take the issues of the people seriously and do better, online and in the communities in which they operate. "If they were to do that, it would be a victory, in terms of influencing their direction and impact on the world. And it would be a victory for people power."
Spencer himself hasn't completely divested from Amazon, choosing to wait until critical mass is reached. "I've gone from a very-frequent to an almost-never Amazon shopper. It's made my life better," says Spencer. "I think it's intrinsically valuable to align my values and my lifestyle; not supporting a company that harms so many things I care about is a simple way to do that and feel more whole."
In addition, says Spencer, "Although I've been a longtime critic of consumer culture, the truth is that I found myself pushing Bezos' 'buy now' button multiple times a week. Consumerism is a disease. Buying things gives you a shot of endorphins. The more you do it, the more you need to do it to get the hit. I wouldn't have easily admitted this was happening to me; but when I started avoiding Amazon so I could research alternatives in earnest, I realized that I had broken a cycle and my overall level of buying dropped significantly."
There's no shame in confessing an Amazon habit. With Threshold's pledge, there's no reason to give it up cold turkey either. And when it is time to quit, knowing you're doing it with tens of thousands of other people will create support and inspiration to stick with it.
In addition, by getting off the Amazon habit, "I'm not dealing with the pain of having over-packaged crap show up at my door and triggering guilt about wasting money, abusing the planet, and being a victim of my own base impulses," says Spencer.
"Instead, I'm back to my old self who normally gives long and due consideration to anything I buy, and that makes me happier." An interesting personal revelation to have.
Has Amazon changed who you are?
"The dream is this kind of activism will inspire all companies" and politics, to do better, says Spencer. "Amazon is just a stepping stone in our theory of change."
This article was produced by Local Peace Economy, a project of the Independent Media Institute.
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