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Very slick conversion rate scam buying theater tickets in London

This scam was so smooth and slick I was in true awe of how it was almost done.
My wife and I went to buy tickets for the Phantom at a ticket shop on Leicester Square. They explained the price in pounds and their fee and gave us a rough idea as to where our seats would be. Everything was fine until the point that they asked for payment. I needed to pay with a credit card and this is when the scam occurred. The agent asked if I wanted to pay in pounds or dollars and their machine showed me how much the tickets would cost either way. Doing a quick mental calculation from pounds to dollars, I realized that by paying in dollars, I would be overpaying by about $13 so I paid in pounds instead. My credit card, that doesn't charge foreign transaction fees, charged me $98 after the charge went through, but their machine was charging me $111 with a terrible exchange rate.
Moral of the story, if you have to pay with a credit card, pay in the local currency and let the banks figure out the exchange rate. You'll come out better then taking the exchange rate offered by the merchant.

Posted by
2400 posts

What you experiencd is called Dynamic Currency Conversion. This is not technically a scam, and can be found almost anywhere in the world where credit cards are taken. It is also found at some ATMs, especially those not owned by banks. And yes, it happens in the US to those with non US credit or debit cards. Anyone who has spent time on this forum is likely quite familiar with this, and the warning to always decline the conversion. Good for you that you caught it in time.

Posted by
4465 posts

It is one of the oddities of life that DCC exists because of competition and anti-monopoly regulations. That the number of times that the end consumer benefits from this competition is minuscule at best doesn't come into it.

Posted by
328 posts

Ya not a scam. We 1st encountered DCC over 15 years ago in Orlando, Florida. The vendor doesn’t profit from it.

Posted by
20565 posts

Welcome to the site, Ray. Thanks for the example. While the scam may be new to you it is old hat here since DC has been around for years with the same results - always pay in local currency and that includes ATM withdraws. And banks don't set exchange rates. The exchange rate is set by the network that your credit or debit card accesses. Always with a half point or so of the interbank rate. And the double whammy is that if your cards charges foreign transaction fees, they will still charge the fee on the dollar amount. You cannot win.

Posted by
3111 posts

The vendor doesn’t profit from it.

Actually, the vendor DOES profit from it. It is the only reason it exists. DCC allows the vendor to recover at least a part of the fee, sometimes all of the fee, they are required to pay on the transactions.

Posted by
6686 posts

Actually the vendor showed you clearly how much it would have cost you in dollars, so there was nothing slick. Glad you learned about DCC; now help spread the word.

Posted by
4855 posts

Ray T., what is surprising is that you haven't seen this same offer at all other transactions - ATMs, restaurants, shops, etc., - on your trip. It is very common, and the same thing happens in reverse to foreign visitors here in the US. Some people are happy to have the "convenience" of dealing in dollars, rather than that complicated foreign money.

Posted by
16581 posts

The frequency of DCC offers varies greatly by country, and perhaps even within countries. The same is true of fees charged by bank ATMs. Thus we have posters who think these are rare occurences, which has definitely not been my experience, taking Europe as a whole. Perhaps the doubters travel primarily to France, where I haven't encountered bank-ATM fees or the DCC option at hotels/restaurants/shops, though DCC is definitely on offer at some ATMs.

The financial environment is ever-changing. We really need to pay attention to screen displays during all ATM and credit-card transactions.

Posted by
4465 posts

There are European countries where it is particularly more rife at merchants, such as Spain, Hungary and Poland. Seems to have passed the peak in Ireland and the UK, although still frequently encountered.

It is also common amongst some international companies, particularly hotel chains.

Posted by
4 posts

Thanks for the replies. Just a couple of things. I had seen something similar at ATMs especially those in stores in Sorrento, Naples and other Italian cities. The exchange rate to dollars was nowhere near what it should have been. Unfortunately I saw plenty of American tourists getting scammed at these ATMs. I finally had to say something to a young Australian man in Sorrento who had started using it and was grateful for the warning.
I hadn't seen it at any restaurants or shops in my travels in Italy, France or Switzerland and only until getting to London did I finally see it. I'm sure merchants are making money off of this type of transaction or it wouldn't be made available. The merchant in my transaction was going to make about 12% off the difference. A nice bit of change.

Posted by
16581 posts

Yes, it is clearly a huge potential money maker. On more than one occasion I've had a hotel or restaurant emplyee choose dollars for me after I said "euros" or whatever was the local currency. I'm sure they are leaned on by management to do that. I generally remember these days to keep my credit card in my own hand so I have control of the card-reading device.

Posted by
4465 posts

Contactless payment cuts out a lot of merchant DCC, but do keep a good eye on the terminal.

Posted by
70 posts

And now, DCC is also “offered” on contactless payments. I was hit by it on almost all chip payments and on two contactless payments.