Costco policing memberships to limit card sharing

Jun 27, 2023, 5:07 PM

Costco is cracking down on shoppers sharing membership cards after the warehouse retailer announced it will begin doing spot checks at the self-checkout counters to discourage non-members.

“We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members,” the company wrote in a prepared statement.

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Costco will now require shoppers to show their membership IDs, which have a photograph of the cardholder on them, before entering the store and when checking out. This protocol comes in response to the company’s launch and ensuing expansion of its self-checkout system.

“I actually experienced this yesterday,” David Burbank, the producer of Seattle’s Morning News, said on KIRO Newsradio. “My father-in-law works at Costco, so he gets a couple of free memberships. And my fiancé has a membership that we both use, and we’re usually together using it. Yesterday, she was at work and told me, ‘Take the Costco card, go get us a rotisserie chicken to set ourselves up for some meal prep for the rest of the week.’ It’s never been a problem before; I’ve gone in before with her card. Never been an issue.”

“But they checked at the self-checkout at the door,” Burbank continued. “You do the little flash [of the card], and they don’t even check the ID at the door, but back at self-checkout, they were checking it. They asked, ‘are you on the plan?’ And because we’re not the same last name, I’m not on the official plan yet. And so they gave me a pass and said, ‘We’ll let you through,’ but yeah, I was very embarrassed. I felt like a little kid getting caught.”

A significant piece of Costco’s earnings comes from membership fees, according to the company’s quarterly earnings report. The retailer currently charges $60 a year for annual memberships and $120 a year for its higher-tier plan, called the Executive Membership. KIRO Newsradio host Ursula Reutin cited Costco made $4.4 billion in profits from its membership fees in just the past 12 months.

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“It’s not stealing,” Colleen O’Brien, co-host of Seattle’s Morning News, said during a debate on KIRO Newsradio over the morality of membership sharing. “Stealing is the action or offense of taking another person’s property without permission and without intending to return it. What are you stealing? You’re paying for food.”

“But you’re getting the benefit of the lower price, even though you’re not legally able to get it,” KIRO traffic reporter Chris Sullivan countered.

Shares of Costco have risen nearly 16% in 2023, outpacing the approximately 14% gain of the S&P 500. Costco shares closed June 26 at $523.42 per share. Overall, its net sales rose year-over-year by approximately 2% to $52.6 billion in its most recent quarterly report, despite the quarter — which ended May 7 — seeing a significant rise in inflation.

“Is it stealing when you use somebody else’s loyalty number at the QFC?” Dave Ross, co-host of Seattle’s Morning News, asked.

“Yes, that’s also stealing to me,” Sullivan answered.

“No, I think that’s just a form of donation,” Ross responded. “Because you’re giving points to whoever else has the number.”

Costco’s decision to police its members more strictly comes after Netflix began alerting customers, both in the U.S. and internationally, about its new policy preventing sharing accounts with people outside their household last month.

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“Your Netflix account is for you and the people you live with — your household,” the company wrote in a press release.

The company claimed more than 100 million subscribers accessed Netflix through password sharing in 2022 and that it lost subscribers for the first time in over a decade. The company added nearly 8 million new subscribers in the final quarter of 2022 after it launched its lower-cost, ad-supported tier. Netflix has since gained approximately 1.8 million new subscribers in the first quarter of 2023.

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

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Costco policing memberships to limit card sharing