British tourists are unwittingly losing millions of pounds every year due to a scam called "dynamic currency conversion" (DCC).

DCC is a practice that allows merchants to offer customers the option to pay in their home currency rather than the local currency. While this may seem convenient, it can actually be a rip-off for consumers.

How DCC Works

When you use DCC, the merchant or ATM converts the amount of your transaction into your home currency at a rate that is typically higher than the mid-market exchange rate. This means that you are essentially paying a premium for the convenience of seeing the price in familiar terms.

In addition, DCC transactions often incur additional fees, which can further increase the overall cost of your purchase. These fees are typically charged by the merchant or ATM, and they are not disclosed to you upfront.

The Cost of DCC to British Tourists

The Consumer Financial Protection Bureau (CFPB) estimates that British tourists lose £280 million to DCC every year. That's an average of £1 million per day.

This means that British tourists are paying an average of 5% more for their purchases when they use DCC. This can add up to a significant amount of money, especially for large purchases.

What You Can Do to Avoid DCC

The best way to avoid DCC is to always decline the option when it is offered to you. This is typically done by pressing the "No" button when the merchant or ATM asks you if you want to "view transaction in your home currency."

If you accidentally agree to DCC, you may be able to cancel the transaction and pay in the local currency. However, this is not always possible, so it is best to avoid DCC altogether.

Here are some tips for avoiding DCC:

• Always ask the merchant if they offer DCC before you make a purchase.
• If the merchant offers DCC, decline the option.
• Pay in the local currency whenever possible.
• If you are unsure whether or not to use DCC, check with your bank or credit card issuer.

What Airlines Are Doing

Some airlines are offering even worse rates to travelers buying flights from the Mediterranean to Britain. For example, Ryanair is automatically selecting DCC for inbound flights to the UK booked with a British-issued card. The airline is offering only €1.05 for every £1, when the inter-bank rate is €1.12.

Jet2 is also offering a poor rate to travelers, inflating the cost of a flight from Alicante to Leeds Bradford by one-tenth.

What the EU is Doing

The European Union is proposing to regulate DCC, saying: "Payment service providers will have to disclose the full costs charged to consumers."

However, the new rules will not be in place by the time the UK leaves the EU, and will therefore not apply to British travelers.

Conclusion

Dynamic currency conversion is a rip-off that is costing British tourists millions of pounds every year. There are a few things you can do to avoid DCC, but the best thing to do is to raise awareness of this issue so that the government is forced to take action.