Currency Conversion Scam During Foreign Travel

When an international traveler uses a credit card to charge items in a foreign currency, the credit card issuer automatically converts the charge to the cardholder’s currency, normally at close to the market rate quoted at sites such as xe.com, reuters.com, and oanda.com. Some credit card issuers also add a “Foreign Transaction Fee” that ranges up to three percent, though other issuers offer cards with no such fee. Many frequent travelers apply for and use these “no foreign transaction fee” cards specifically to avoid these fees.

Some vendors, however, have developed a predatory practice known as “dynamic currency conversion” or “DCC.” In this scheme, when a U.S-issued credit card is presented for payment, the merchant tries to talk the customer into having the credit card billed in U.S. dollars, rather than the local currency. The merchant does not disclose that if the unsuspecting tourist chooses US dollars, the conversion will be carried out at a far higher rate than the credit card company itself would charge. Also, the merchant often states or implies that the credit card company’s own foreign transaction fees will be avoided by choosing DCC, which is not true.  Choosing DCC usually simply adds five percent, or even more, to what the credit card company would charge. For this reason, travel and financial advisors unanimously recommend that the tourist never accept DCC when offered.

Unfortunately, many merchants go further, using outright coercion and/or trickery to impose DCC on their customers. Car rental companies such as Hertz, Firefly, Dollar and Avis, as well as several hotel chains, such as Hilton, are among the worst offenders in victimizing tourists. In its communications with its customers, for example, Hertz refers to DCC as “Choose Your Currency” or “CYC,” when in fact the customer has no choice at all, as Hertz often forces DCC for any credit card that permits it.

In the case of Hertz, the deception can take many other forms.

First, it insists on imposing its currency conversion “service”, with its inflated exchange rate, even on travelers whose cards convert currency at no charge. No renter using a "No Foreign Transaction Fee" credit card should be offered DCC.

Second, its promotional material repeatedly asserts that its “service” will eliminate certain credit card charges, knowing that this is not the case. If a renter uses a card with foreign transaction fees for Hertz' DCC service, that renter may pay both Hertz and his or her credit card a conversion fee.

Third, when a U.S. customer picks up a car at a European location, Hertz requires them to sign a receipt which, in tiny type, “requests” Hertz to convert the quoted price to U.S. dollars, without any discussion about what rate will be applied or any way for the customer to choose otherwise. This is in open defiance of credit card rules that prohibit any method that requires the customer to “opt out” of a currency conversion.

Fourth, when Hertz submits the U.S. dollar charge to the credit card company, it states, purportedly in the name of the cardholder, “I have been offered a choice of currency and chosen to pay my rental charges in the currency of my card,” knowing that no meaningful choice has ever been offered. Moreover, the fee charged by Hertz is masked in the exchange rate indicated.

Last, even in the limited instances where the DCC charge is in lieu of a fee charged by the customer’s credit card, the exchange rate used by Hertz is most likely much less favorable than the exchange rate utilized even by the most expensive credit card issuer.

In February of 2014, we filed a lawsuit against Hertz. You can read the complaint here.

If you have been a victim of the DCC currency conversion rip-off, whether from a car hire firm or any other business, please fill out the form below.


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