The Fine Print: 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.

ShakedownFor 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.

Last updated on December 26th, 2016

About Alex Bachuwa

Alexander Bachuwa is a New York attorney who focuses on consumer protection. He is also a BoardingArea blogger. Contact Alex at through his website at bachuwalaw.com and visit thepointsoflife.com

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DCC should make you mad. But what can be done? – The MileLionrick bWenlinNaomiDean Fowles Recent comment authors

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carleton voos
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carleton voos

Great article. What is the bottom line? Do you choose Euros or US$?

escot
Guest
escot

Important article, Alex, and thanks for posting here. I’d like to see that class action put the brakes on the whole exchange/cc con game. (pun intended) Alas, a problem for many here is using one’s credit card with the thought of it providing at least a portion of the car rental insurance needs. One more set of considerations working against renting cars abroad. (a profoundly intimidating process, or so it seems to me)

btw, just got back from a delightful week+ in Cancun & Playa del Carmen. (where the ADO and local bus options saved us muchos pesos.) The currency scams at the CUN airport deserve another article. For starters, the official looking currency exchange booth that blasts you in the face at the airport offers you “deals” nearly 25% under (sic) actual real exchange rates….. Did a heck of a lot better with exchange booths at the hotels…. (and yes, much better than the atm’s — which have skimming going on there too)

ps to Greg…. oh the fun article I could write….. “tale of two all-inclusives” 🙂 (Zilara & Viva Maya)

TimmyD
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TimmyD

I had a few times in Eastern Europe when the bill was automatically done using DCC with no ability to choose local. These were just regular businesses, not international chains

rick b
Guest
rick b

In those cases I always refuse to sign the receipt and tell them to re-run in their local currency. Don’t care if it raises a big stink, they need to learn not to decide for us.

Rico
Guest
Rico

Good read. I’ve had Hilton charge me in USD after me telling them to charge it in EUR. Grrr… definitely not favorable exchange rate at all.

Rico
Guest
Rico

Ummm… I meant to say, Hilton charged me in EUR after I told them to charge me in USD. =P

Paul
Guest

Despite the lawsuit, Hertz is still acting sleazy. I reserved a car in Ireland using the US website. When I returned the car, Hertz almost doubled the price by adding miscellaneous fees, including a 40 Euro “adminstrative fee” that the agent said was added because I declined their insurance. To add insult to injury, they charged me in USD without my permission, even though my rate quote was in Euros. So, they did a double scam – bogus fees and currency manipulation. I was able to get this reversed by Citi after contesting it. Interestingly, there was no back and forth, just an email the next day from Citi saying the dispute had been resolved in my favor. Guess this is just a routine drill for Hertz.

Max
Guest
Max

I was instructed by Avis that the only way to opt out of DCC is by crossing out the pertinent language from the contract. I assume the same method will work with other rental agencies.

Dean Fowles
Guest

DCC is a total pet peeve of mine. The real scam is at the ATMs where it says – “want to use our rate?” The answer is a big “no!” You want to use Visa or Mastercards rate. That’s for a great article!

Naomi
Guest
Naomi

Ugh this drives me nuts. Ireland is the worst as they don’t bring the machines to the table in pubs etc. I also had to fight Hertz in Ireland.

I’m currently in NZ/Australia and I’ve run into this a handful of times in NZ. Fortunately out here you control the machines.

Wenlin
Guest
Wenlin

Swissotel in Zurich did not ask me which currency I wanted to charge my hotel bill. I saw my hotel receipt had a 3% upcharge for the conversion to USD from CHF. I contested it with the manager, and she admitted fault and attempted to refund me and reprocess my charge in CHF. Unfortunately, her system wouldn’t allow (or she didn’t know how?) to refund me in the same exact USD that I was charged (maybe because of the extra fees) and instead refunded me the original CHF that was billed. Thus, in the end I still paid more than I should have. Lesson learned: repeat like a broken record ‘I would like to be charged in the local currency please’ at check in and before checking out! Thanks for the article!!

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