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Currency conversion scam at p.o.s. -- have you experienced it? Handled it?

Currency conversion scam at p.o.s. -- have you experienced it? Handled it?

Mar 4th, 2005, 04:50 AM
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Join Date: Feb 2005
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Currency conversion scam at p.o.s. -- have you experienced it? Handled it?

Have seen references to this on Fodors, and here is description from ContextRome website: "There is a spreading phenomenon in Europe (it began in Ireland and has spread to Italy) of hotels and restaurants converting your bill from Euros to dollars at the point of sale. Usually this is done with an extra 3% or even 5% markup added."

I presume how this work is that the restaurant bill is, say, 100 Euro (when the conversion rate is, say, $1.32 to 1 E), but they bring it to you and say it's $138. -- yet the credit card company will STILL tack on their own foreign-transaction/currency-exchange surcharges, so the restaurant keeps the $6.

Is this correct? Has anyone experienced this?

How would you deal with the problem? -- what would you say to the waiter/manager, either before or after you get the bill?

HKP is offline  
Mar 4th, 2005, 04:53 AM
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Insist on paying the bill in euros, otherwise you walk. They can't very well call the cops, can they? because you offer to pay in euros which is the legal currency. If they get nasty about it, report them to the local TI. When you get home, report them to as many guidebooks as you can so they might drop them from their listings.
Edward2005 is offline  
Mar 4th, 2005, 04:54 AM
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ira is offline  
Mar 4th, 2005, 05:00 AM
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Agree with the others. Insist on Euro being charged to your account.

As to getting hit with a Foreign Currency Conversion fee if charged in USD - no way. Checked with Citibank when they recently sent notices that they are increasing their percentage for FCC from 2% to 3% (their fees will now be a total of 4% of which 3% goes to Citi, 1% to MC/Visa)... was advised by different reps that USD are USD regardless where charged and there is "no FCC" for this. Now, if using another financial institution, cannot comment, but if this is the case which is kind of "double dipping" that's a scam and should be reported here in the States - or dump that card and obtain another.
Mar 4th, 2005, 06:19 AM
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Note to self: Check on currency conversion charges on both credit cards, a few weeks before next trip.

Keith is offline  
Mar 4th, 2005, 06:24 AM
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I would bet a million dollars that this scam originated when somebody decided to capitalize on the tons of people who kept asking them (see elsewhere on this board) "can I pay in dollars?" or "why don't you take American money?".

Well, NOW they take American money.

QC is offline  
Mar 4th, 2005, 06:39 AM
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We paid for 99% of our vacation to Europe in Euro cash. even at the hotels!
Before checkout I went to an ATM and got euros and paid the bill in cash that way I didn't have to worry about the conversion rate on my credit cards just the fee of $1.50 for up to 400 euros. If you are low on cash for your vacation take it off your credit card in the states and put it in your bank account and if you pay it back before your next statement there will be no charge.
jeffwill4you is offline  
Mar 4th, 2005, 06:41 AM
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This happened to us on a hotel charge on a recent trip (didn't notice until after we had left the establishment). Also happened to my brother on the same day, different town. So once we realized this seemed to be the new way of doing things we decided rather than argue with every hotel and restaurant we would just pay cash for everything.

ATMs are every where these days and even if you have to pay a small fee each time you withdraw it's much less than the automatic conversion rates being charged on credit transactions.
vinolover is offline  
Mar 4th, 2005, 06:49 AM
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jeff I have never seen a credit card that let you float a cash advance until the next payment was due.

They hit you with the cash advance fee and start charging interest the day you take the money out.

I find it very difficult for me to ever justify a cash advance from a credit card. In fact I've never done it.
indytravel is offline  
Mar 4th, 2005, 07:00 AM
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I found that by paying in cash( euros), I was offered a discount...even at a hotel.

After being offered the discount, i started asking when making a larger purchase,.."how much if i pay you in euros?"

Dick is offline  
Mar 4th, 2005, 07:06 AM
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I'm not convinced this is absolutely a scam. If the merchant receives payment in a foreign currency (US dollars), he would have to pay some currency conversion fee to convert the dollars to his local currency, and I would expect that the conversion fee would be paid by the customer. Unless you have a good credit card with low fees, it appears that 3 or 4 percent conversion markup of the transaction cost is going to be paid by you, either to your bank, or to the merchant.

The solution, it appears, is to get a card with a very low conversion fee, and pay in local currency. I don't see paying in cash as advantageous, as the ATM network has a 1% conversion cost, and some banks add fees or percentages to that.
clevelandbrown is offline  
Mar 4th, 2005, 07:25 AM
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I think its a scam.

<if the merchant receives payment in a foreign currency (US dollars), he would have to pay some currency conversion fee to convert the dollars to his local currency, and I would expect that the conversion fee would be paid by the customer.>

There should be no reason for a merchant to pay a conversion fee. He would be getting his payment directly in Euros.....just as an italian charging something in the states would be charged in Us dollars.

Dick is offline  
Mar 4th, 2005, 07:35 AM
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I had this happen on a recent trip to London, the exchange rate I go was less than favorable. I just got a letter from my credit card compant stating the all foreign transactions will have a service fee added whether in dollars or a foreign currency.
richardab is offline  
Mar 4th, 2005, 07:38 AM
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scam? you are being given the luxury of using dollars in Rome where even lire would be turned down!

imagine you were running a hotdog stand in the US and a italian customer asks if he can pay in euros.

unless you are going to save those euros for your next trip to europe this means a trip to the local bank/exchange bureau.

not very attractive to the hotdog seller.i wouldnt be interested in the hassle even for 5% more.

how to handle it: pay in the local currency
got1tiel is offline  
Mar 4th, 2005, 07:44 AM
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I think you are missing the point.

The original poster paid by credit card....that means the merchant would get paid in local currency.

There is no reason for the merchant to get involved with conversion rates.

If I charged the italian, for his hot dogs on a credit card....wouldn't I charge him in dollars. Any conversion to euros would be done by the italians hometown bank

Dick is offline  
Mar 4th, 2005, 08:08 AM
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I've had this tried on me.

I just say "Charge my Master Card in £ Sterling. My bank will take care of the conversion."

There's no response that can be defended.
Robespierre is offline  
Mar 4th, 2005, 08:09 AM
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I had this happen a couple times in Ireland at touristy stores. They use a very high exchange rate, which cost you extra money, and makes extra money for the vendor~perhaps they are trying to make up for the credit cards charges they have to pay. I believe once I let it go, the other time I insisted they charge it in punts (pre-Euro). And when that happens, make sure you see the void for the first charge in dollars!
KateIP is offline  
Mar 4th, 2005, 08:55 AM
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Of course it's a scam, they wouldn't be doing it otherwise. It's especially obvious it's a scam because they try to force people to do it who don't want to and are secretive about it. Since this is by credit card, it is of no benefit to the customer whatsoever--except I will admit there are some people who really wouldn't understand that as they think if it is charged in dollars they are getting a deal. I know I've seen posts on Fodors about that -- how people are saving money if something is priced in dollars.

I really do not think it good financial advice for someone who is so low on cash they have none for spending money in Europe to go out and take cash advances on credit cards and put that in their ATM account. That is a loan and they will charge you for it, it's not free and not like purchasing merchandise. I've never heard of any bank giving you cash for free on a credit card for a month, either, they always charge immediately because it's a loan. I think they would be in big trouble if people could get free loans of cash for a month.
Christina is offline  
Mar 4th, 2005, 09:39 AM
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Okay, here is the correct information; so much misinformation out there.

1. We have discussed on this board the spread of this scam, and it is a scam, called dynamic currency conversion. Do a search on that topic and read all about it. Essentially the merchant is still getting his in local currency and you are paying in your currency. Credit card processing companies now provide the software and hardware for this and encourage merchants to pull this garbage on their unsuspecting customers. They use terms such as we are using the official exchange rate and not the inflated credit card rate see what the bank is saying. Of course the bank rate is 10% abouve the official interbank rate and even with the 3% (soon to be 4%) fee you still come out ahead letting the credit card company handle the conversion (of course you shouldn't be using these near criminal credit card companies anyway but that's another story).

2. This is important..by credit card rules they cannot force you to take part in this scam. You have the right to insist the charge be written up in local currency; as a matter of fact the terminal asks the merchant if he or she has gotten permission of the customer to use the dynamic currency conversion rate and all they have to do is push a button on the terminal and the charge will revert to local currency. Some merchant lie and say by rule US credit cards must be charged in US dollars and that is a big big lie.

The purpose of dynamic currency conversion is so the merchant and his local bank can get a piece of the currency conversion fees bank hack onto foreign charges.

3. Bank One/Chase has recently sent out changes in terms clearly indicating that as of 01 April, they will be raising the charge they add to the converted amount to 3% and that all international transactions, including those in US dollars, will now be surcharged. Guess what that is aimed at....if people pay these fees expect the practice to spread.

Incidentally, in the paper work I received from Bank One, they dropped the statement that mastercard or visa will be adding 1% to the interbank rate rather it is much more vague now that mc/visa will use a rate from the rates available to them that day...what that means who knows.

So boys and girls if you run into any merchant trying to tell you as a favour we will write the charge up in US dollars, tell him to go to hell; and if he says it can't be done insist on seeing the manager.
xyz123 is offline  
Mar 4th, 2005, 09:50 AM
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Amazing! And also a good argument for venturing off the heavily-worn tourist path!
Dave_in_Paris is offline  

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