Wife is in Italy, crazy fees from ATM, or terrible exchange rate.

they trace it back to a crazy high exchange rate from the Italian bank

It shouldn't be the Italian bank doing the exchange. They should be passing the transaction in Euros back to the card company (Visa or Mastercard) and they should be doing the conversion and charging your bank in your currency.

She may have been caught by the dreaded "DCC" (Dynamic Currency Conversion). If the machine asked her "do you want to be charged in USD?" (or whatever your home currency is), and she said "Yes", then she is giving the Italian bank permission to do the conversion, at whatever rate they choose.
If you get this question, always say no and get charged in the local currency.

You can also get caught by DCC when using a credit card. If it asks "do you want to be charged in . . ., or displays any amount other than the actual bill amount, refuse to authorise the transaction and insist if they want paying, then charge the amount on the bill, exact to the Eurocent.

Don't have an answer to your problem, but my wife is also in Italy now and withdrawing Euros from our local credit union. She withdrew 500E and it cleared our account as $591 So yes, something sounds strangely wrong with your account. Some ATMs have the sneaky "Convert to US Dollars" as a default, and you must must physically select "NO", you must clearly choose to NOT be charged by the ATM in US Dollars. It's the Dynamic Currency Exchange ripoff thing...

EDIT- not a late reply nor piling on, just slow typing, the above two answers had appeared by the time I hit send.

Without seeing the withdrawal slip or the screens, I would hazard two guesses.

First, this was actually not a bank on one of the basic international network, as that exchange rate is set by the network. Second, and more likely, she almost certainly accepted the DCC scam, not realizing that the rate they offered to convert to dollars for her convenience was substantially worse than the given exchange rates. Even banks that are part of the system can still offer to do this, it simply avoids the system and is done using their own rates, which is a convenience solely for them. While your bank can refund ATM use fees, there is nothing they can do if you accepted this rate, as that is the amount the ATM's bank was authorized to withdraw from your account. Unfortunately, it appears that DCC is becoming prevalent in Italy (also Spain), along with some of their banks refusing US cards. When we were there last year we made it a point to use non-Italian bank ATMs, for example Deutsche Bank, and this problem never occurred.

We have the CapOne High Yield Money Market account and card, along with Schwab's account and cards, and have had no problems or unexpected rate conversions, other than carefully reading the ATM machine wording so as to make sure we do not do the transaction with them converting to dollars. Carefully, as some of these machines use some reverse language and on a quick reading (who wants to stand there squinting for a minute at an ATM screen and trying to process the language fully) it makes it look like you need to let them convert in order to complete the transaction. To my knowledge, although they may attempt to completely confuse you, no ATM (or credit card machine) can force you to accept their own private conversion rate.

Did she screw up and accept doing the transaction in USD? Then she would have been suckered into Dynamic Currency Conversion, in which she allowed the Italian bank to choose whatever exchange rate the bank wanted. Decline this and let the credit card network do the currency exchange and it should be within 1 % of the going rate at the time of the transaction.

Also, big Italian banks are starting to charge ATM fees of 3 or 4 EUR per transaction. So if she did 3 transactions totaling 400 EUR, she could have incurred about $11 to $15 of ATM fees.

I just looked at our transactions from Spain a couple of weeks ago and the bank withdrawal was about what I would expect with the Euro/Dollar exchange rate. We were using our bank debit card for cash withdrawals and a Capital One card for regular charges.. The Spanish banks did charge more though. It looks like they charged about 2.50 for transaction, although that is not nearly the amount you are discussing.

It sounds like she is getting caught in the DCC trap.
This was not an issue in 2016, when we were last in Italy, or I don't remember it.
Thank you all for the prompt, and very helpful reply. As soon as I can reach her, I will have her make a withdrawl and see what happens. I will post what we find. Thanks so much!!

Jeff

It's not the card, it's not Capital One. It is the ATM that was used. Look at the receipt. If it shows anything about a US$ amount and/or exchange rates, you were hit with Dynamic Currency Conversion where the ATM gets to pick what exchange rate to use. Great for the ATM owner, not so good for the card owner as you saw. Just say no if offered to be charged in US$. What shows up on your statement will always be US$ anyway.

Capital One is one of the best to use for foreign ATM withdrawals since they charge absolutely zero for those transactions on most of their debit cards.

Please ask a question to your wife, just out of my curiosity: did she use ATM machines at bank branches, that are mainly for Italians to use, or did she use one of the free standing ATMs that are often found at tourist shops, that are mainly for tourists?

My wife had sent a picture of the receipt last night. I cannot post a picture of it or I would do so, but, the machines she used were both in public areas. One in the airport, and the other in the train station in Naples.
Should she avoid these places and look for banks?
I am normally with her, and take care of most of the logistics, and money, so I always use bank location ATMs. She would not think to do so.
When I looked over the reciept, it gives the amoount of the transaction in Dollars, and even gives the exchange rate as .7622.
The market rate today is .85.
Quite a tidy profit for the bank.

Thanks all!

Jeff

Issue is not where but which.

If an ATM has the name of an exchange bureau on it, don't use it. That would be Travelex for example. Also, don't use an ATM if it doesn't have a Bank Name on it. And finally, decline DCC. This is what got her on these transactions: accepting DCC by agreeing to be charged in US$ instead of Euro.

It would be nice if there was a video somewhere online that would show how to avoid DCC by giving actual screen shots of ATMs and so on. So far, I have not found one.

Yup, all the classic signs of DCC.

Sorry.

When you let her know, tell her that she will also likely see that at dinner and when checking out of a hotel. Just Say NO to DCC.

Her receipt says Euronet Worldwide, which I assume is an exchange service.
When did this type of scam begin? we did not have this problem in 2016.

Jeff

DCC has been around for years...I guess you just didn't know about it because it hadn't bitten you yet. Welcome to the club :-)

When traveling overseas, I always try to use an ATM affiliated with a large international bank whose name I know, such as a Deutsche Bank or HSBC, when I can find one.

It's not a scam, it is a helpful service provided at a low cost to assist customers in seeing what the actual cost of their transactions will be and is greatly appreciated by those surveyed. Or so says the card companies. I think most of us would disagree.

DCC started in 1996. It became a regulated service (by Visa and MasterCard) a few years after that. The upcharge can be as much as 18% over the rate set by the networks. If you are charged for DCC on a credit card transaction and you were not made aware at the time of the transaction this was optional, you can do a chargeback through your card issuing bank and usually win.

So it did exist in 2016. You were just lucky enough, or smart enough, to choose wisely allowing you to avoid it.

Before you authorise any transaction (credit card or cash from an ATM) it shows you the actual amount. For example, on the screen:
€123.50 enter PIN and press OK.
Or, if it is an old-fashioned paper signature, the amount will be printed out above where you sign.
Never accept the transaction if it shows anything other than the correct amount in the local currency.

I found this example on the internet (photo): http://vittoe.com/2011/images/0004.jpg
Note, you press "Yes" to accept DCC, if you want Euros you have to press "No", which if you don't read the screen properly looks like you are cancelling. A moments lapse of concentration and you are poorer.

And DCC does exist in the US as well. As it only applies to transactions with foreign cards, you have never seen it in your own country, only tourists have.

I'll just add that yes, if there are US dollars anywhere on her ATM receipt, she fell victim to the DCC scam. As said above, it happens to the best of us sometimes - the wording isn't always clear, and one slip of the finger and you've "accepted" it without meaning to!

For a long time, ATM machines did not offer DCC, but now they're starting to. I encountered it in the Zurich airport, and being both jet lagged and not expecting it, almost fell for it. Credit card machines in many places have offered it for much longer.

So, going forward, if she "just says no" when asked if she wants to be charged in dollars or accept an exchange rate, she should be fine! If she is not allowed to be charged in euros, she should cancel the transaction and find another machine.

Yes, in Switzerland two years ago the USD amount was the default on all the machines I encountered -- but there WAS a "NO" button on the screen if you took a second to read it.

Good that you figured this out after only three withdrawals, not after she got home !!

Update
Wife just made a withdrawl, and said no when asked if she wanted the transaction in Dollars. Everything was as it should be. The only fee was a three Euro ATM fee. Thank you all very much for the help. Actually, I might not have caught it if Cap one had not flagged the account because I had not told them she was traveling.

Thanks again!!
you all have saved me a small fortune!

Jeff

Basically -- you always want to pay in the currency of the country where you are -- if in Italy, in euros. If in the UK, in pounds. Don't ever choose the $ option!! (unless you're at home in the States!)

And don't use the most obvious, stand-alone ATM in a transportation hub or store -- find a bank-branded ATM somewhere!