Dynamic Currency Conversion – A Euphemism for Highway Robbery
It was not long ago that credit card companies used to charge consumers a foreign transaction fee for purchases made abroad. Now, the majority of banks offer credit cards that eliminate these pesky fees. Finally, consumers can trot the globe without worrying about paying a surcharge simply for renting a car in another country.
Or so they thought.
For travelers, the letters DCC should become synonymous with the dreaded SSSS. The latter refers to the TSA’s Secondary Security Screening Selection, a literal scarlet letter in which even those with Global Entry are still hassled at the airport. The former stands for Dynamic Currency Conversion, a predatory method for overcharging unsuspecting consumers for the so-called service of converting a foreign transaction into U.S. dollars.
This scam works in a variety of ways. The simplest is as follows: A traveler goes out to dinner in Europe. When the bill arrives, the customer is given the option of paying in euros or U.S. dollars. Out of familiarity, the customer chooses dollars. Instead of receiving the foreign exchange rate from his own bank, the customer is at the mercy of the foreign bank processing the transaction. Suffice to say, the customer is often given a less than competitive rate. In fact, some merchants tack on an additional percentage for the convenience of being charged in dollars.
For argument’s sake, assume that it is the uninformed customer’s fault for not recognizing the deception. After all, the customer was given the option of choosing either currency at the point of sale. These shady transactions can be eliminated by educating consumers of the consequences of their selection. The real heist is purported by despicable giant corporations who trick customers to agree to DCC. The list of offenders includes car rental companies like Hertz, Firefly, Dollar, and Avis and a familiar hotel brand for point loyalists—Hilton.
Hertz, for example, cleverly markets DCC as a benefit for its customers. By referring to it as ‘Choose Your Currency’ (CYC), Hertz creates the illusion that the customer is in control, a throwback to its iconic ad, ‘Let Hertz Put You in the Driver Seat’. The result of this choice is an inflated invoice. The shameful behavior does not end there. In the inexplicable chance that a traveler uses a card that charges a foreign transaction fee and falls for the CYC option, that customer may be charged a fee by both the bank and by Hertz.
Hertz takes it a step further in Europe. When a customer rents a car, the customer is required to sign a receipt whereby the customer requests Hertz to convert the cost of the rental to U.S. dollars. Once again, Hertz pretends to be on the side of the consumer by offering this service. Ironically, banks, institutions that are not without sin, have strict rules that prohibit merchants from forcing customers to enter into these agreements.
When Hertz submits the charge to the credit card companies, it bundles the fee for its currency selection service and its less than favorable exchange rate, thereby masking the itemized elements of the charge. Hertz gets away with this by audaciously including the following words on behalf of the customer: “I have been offered a choice of currency and have chosen to pay my rental charges in the currency of my card.” Under the guise of a customer’s consent, Hertz can charge a premium for doing absolutely nothing.
Claims against corporations like Hertz are subject to class action litigation. The benefit of a class action claim is the opportunity for a united group of consumers to send a powerful message to companies behaving badly, one that can finally put consumers back in the driver’s seat where they belong.
In February of 2014, the law firm of Giskan Solotaroff & Anderson LLP filed a lawsuit against Hertz. If you have been a victim of the DCC currency conversion scam from Hertz or from another business please visit the law firm’s webpage gslawny.com for more information.