Credit card currency conversion surcharge scam

JamesFelix

Unfortunately the practice known as 'Dynamic Currency Conversion' whereby a surreptitious currency conversion surcharge is added at the point of sale appears to be alive and well in Switzerland, with both 'Fexco' and 'Six' payment processors being implicated.  Earlier this year I was the victim of two such instances.  Unfortunately Barclaycard in my experience do not cater for complaints about this matter; they merely send out letters containing standard (and irrelevant) paragraphs of text rejecting complaints.  To get any satisfaction in the matter I had to take my complaint to the Financial Ombudsman.  

In more detail - this scam occurs when a price is quoted in one currency, but then when payment is made it turns out that the charge has been made in the currency of the country in which the credit card is held, together with a currency conversion surcharge - typically this seems to be between 3.5 and 4 percent. According to a Wikipedia article on 'Dynamic Currency Conversion'  this practice infringes both Visa and Mastercard rules.  I would therefore encourage anyone who experiences this to complain o their card provider, and if necessary to the Financial Ombudsman.  When it happens, this practice entirely negates the value of having a so-called 'travel' credit card where no fee is charged for foreign currency transactions.  On this forum there is a post from 2005 dealing with this subject - it seems nothing changes! 

Marchitiello

I am not sure I understand what you describe:

Dynamic Currency Conversion is where the seller’s POS will ask you to pay in your card’s currency, which usually means a terrible exchange rate and fees, and it is widely suggested not to take up this offer at POS with one of the many Travel Cards you refer to.

with the recommended travel card (Chase UK debit Card, Starling Debit Card, Halifax Clarity Credit Card, Barclaycard Rewards CC as well as others) you should always pay in the local currency, and reject any offer to see and/or pay on your card currency. Doing so means that you will benefit of the Superior exchange rate and fee free.

The_Fat_Controller

DCC is a fact of life.

It is not a scam.

Just decline it at POS or in the ATM menu.

Simple to do.

JamesFelix

In the instances I refer to no choice of currency was offered, and the price was stated in Swiss francs.  The conversion and surcharge was surreptitiously introduced at the moment of payment.  This is a scam.  To add insult to injury, the receipt printed out then fraudulently claimed that a choice of currencies had been offered, when no such choice was ever apparent. There was no 'offer' and no apparent opportunity to 'decline' - so the comments above are not applicable.  

The_Fat_Controller

OK then, the retailer scammed you, not Visa, Mastercard or your card provider.

DCC is either accepted or declined by a press of a button on the payment terminal (or ATM) so whoever was operating that did not give you the choice as they should have.

zagfles

Yes, it's rife in some countries. The rules state than DCC must be offered and accepted by the customer. But retailers are often "encouraged" to offer DCC by the DCC provider giving them a kickback of some of the exchange rate markup.

The DCC question is usually asked after the customer has tapped their card or entered their PIN, so at that point the price is displayed in local currency. If you have/can see the POS terminal (eg a wired device in a shop or a handheld device in a restaurant), always keep hold of it/check it after tapping or entering the PIN to see if it asks the DCC question. Otherwise the retailer may answer the question for you. Some will think they're doing you a favour, others may have been told what to do by their boss who likes the DCC kickback. Sometimes the DCC question is asked twice (are you sure??) as if you're making the wrong decision, so I guess it's easier for staff accept as there's less buttons to press.

Sometimes eg in hotels, car hire places you don't even see the terminal, they just charge your card applying DCC without consent. Always state you want to be charged in local currency when handing your card over.

ATMs are quite straightforwards as they will clearly offer DCC, always decline ie take the "without conversion" offer. If the ATM doesn't offer DCC you'll get charged in local currency. Note that if you use a Euro ATM at a UK airport, DCC is usually compulsory, ie they will charge you in GBP at a rubbish rate. But that's because you're still in the UK. If you wait till you get to the foreign country, DCC should always be optional.

eDicky

JamesFelix said:

In the instances I refer to no choice of currency was offered, and the price was stated in Swiss francs.  The conversion and surcharge was surreptitiously introduced at the moment of payment.

How did this moment of payment proceed.? Did you or the vendor control the terminal before and after inputting your PIN or tapping your card..?

Sometimes the terminal is set to give choice of currency after PIN input, so if you don't notice or the vendor takes back the terminal quickly you lose the chance.

Regulations require that the choice be given, but it doesn't seem to be actually illegal not to do so.

In my opinion it is a legal scam even if the choice of currency is given, with inexperienced travelers hoodwinked into paying extra. If it was truly impossible to decline DCC in the cases you experienced, then I agree that it is pure scam.

zagfles

eDicky said:

JamesFelix said:

In the instances I refer to no choice of currency was offered, and the price was stated in Swiss francs.  The conversion and surcharge was surreptitiously introduced at the moment of payment.

How did this moment of payment proceed.? Did you or the vendor control the terminal before and after inputting your PIN or tapping your card..?

Sometimes the terminal is set to give choice of currency after PIN input, so if you don't notice or the vendor takes back the terminal quickly you lose the chance.

Regulations require that the choice be given, but it doesn't seem to be actually illegal not to do so.

In my opinion it is a legal scam even if the choice of currency is given, with inexperienced travelers hoodwinked into paying extra. If it was truly impossible to decline DCC in the cases you experienced, then I agree that it is pure scam.

I don't think it's a scam if it's offered and accepted, particularly as now I think the % markup has to be displayed. Currency exchange places which claim to be "commission free" but where a large commission is hidden in the rate is IMO much more of a scam and that's been going on for decades.

But where DCC is imposed on customers who haven't agreed to it or even been asked, that's basically fraud. The amount agreed to by tapping or entering the PIN has been changed from eg 100 EUR to 90 GBP. That's similar to altering a cheque after it's been signed.

JamesFelix

To answer the foregoing questions - in regard to the larger transaction - there was a glass screen between me and the cashier - there was a keypad on my side of the screen, but plainly there was a degree of control/input from the cashier's side of the screen.  I'm not really able to say more about questions of control, although just after the event I spoke to the cashier and another of her colleagues about what had occurred; one of them denied being able to control the currency used. In the case of the other transaction I cannot recall whether there was more than one piece of hardware being used to set up and control the transaction.  However in both cases no choice of currency was apparent.  This is not the same thing as saying that 'I can be sure that no choice of currency was possible' - since I am not in a position to know whether either the cashier or myself could have by some means exercised such control.

What I can say is that the system appears to be set up to deny any obvious and evident choice of currency to the customer.  My strong suspicion is that this is deliberate, and designed to trick and coerce customers into paying the surcharge.

Migster

I'm not sure if there are any specific laws relating to DCC but there are card scheme rules that should be complied with. Here is a doc from Mastercard https://www.mastercard.com/elearning/dcc/docs/DCC Guide 20.02.17 EN.pdf

OP - page 37 may be of interest (assuming you were using a Mastercard, though I'd expect Visa has very similar rules)

Marchitiello

@JamesFelix you have mentioned Fexco as one of the processor. In the following page it show in a linked Video “how it works”, clearly showing that an option is presented and must be selected. If this did not happen you should have made it clear in your complaint to Barclaycard and perhaps reporting it directly to Fexco. The same page has also a link to how Integrated POS would work. An integrated POS is where the cashier control the card machine terminal from the main till (think of UK supermarket set up for instance). Again, even with the integration, I am pretty sure that the choice can only be made from the card terminal (the same way as the PIN could only be entered from that side, albeit the cashier could select “cardholder not present” or “signature” from his side, which in turn means for the retailer taking an increased risk of the transaction not being honoured by the bank. 

https://www.fexco.com/currency-conversion-solutions/dynamic-currency-conversion/#

Edit: Sixt also clearly explain that a choice is offered to the customer who need to accept the option https://www.six-payment-services.com/en/shared/products/value-added-services/dcc.html