Costco Clamps Down on Membership Card Sharing at Self-Checkout

Costco Clamps Down on Membership Card Sharing at Self-Checkout
A sign outside a Costco Wholesale store in Glenview, Ill., on May 24, 2016. (Jim Young/Reuters)
Katabella Roberts

Costco has begun clamping down on non-member shoppers using other people’s membership cards, the company confirmed in a statement on June 27.

As part of the crackdown, the retailer has started requesting that shoppers now show their membership cards with a photo when they head to self-checkout registers.

Those who do not have a photo with their membership cards will be asked to show a photo ID, according to the company, which did not specify exactly which type of identification will be accepted.

Costco already asks shoppers to show their membership cards at cash registers when they check out, but company officials said they have seen an increase in card sharing since more self-checkouts were fitted into its stores, prompting the latest stricter measures.

A Costo spokesperson told The Epoch Times in an emailed statement, “Costco’s membership policy has not changed. We have always asked for membership cards at our registers at time of checkout. Our membership policy states that our membership cards are not transferable and since expanding our self-service checkout, we’ve noticed that non-member shoppers have been using membership cards that do not belong to them.

“We don’t feel it’s right that non members receive the same benefits and pricing as our members. As we already ask for the membership card at checkout, we are now asking to see their membership card with their photo at our self-service checkout registers. If their membership card does not have a photo, then we ask for a photo ID.”

Costco states on its official website that its membership cards are “non-transferable,” but notes that there are “several ways to share the experience with family and friends.”

“Anyone with a card can bring up to two guests to the Warehouse during each visit,” the website states. “Keep in mind that purchasing items are exclusive to Costco members.”

Card Membership Business Model

Primary members or account managers of the cards can also assign their free household card to one other person in their home, which Costco says means they will also get the benefits of a membership.

Unlike many big retailers, the majority of Costco’s earnings come from membership fees, with the cards allowing customers to purchase in bulk, something that has appealed to many households amid soaring inflation.

Costco gold star memberships set customers back $60 per year while executive memberships— which come with additional benefits such as greater savings and annual 2 percent rewards—cost $120 ($60 membership fee, plus $60 upgrade fee).

Both cards are valid at all Costco locations worldwide and come with two cards for people living at the same address.

Costco has 124.7 million cardholders worldwide and serves 69.1 million households, according to its official website.

The retailer reported $1.04 billion in revenues from membership fees in the third quarter, marking a 6 percent increase year over year from the $984 million it reported in the same time period last year.

A spokesperson told FOX Business that the company is “able to keep our prices as low as possible because our membership fees help offset our operational expenses, making our membership fee and structure important to us.”

A Netflix logo on a TV screen, ahead of a Swiss vote on a referendum called "Lex Netflix," in a photo illustration taken on May 9, 2022. (Denis Balibouse/Reuters)
A Netflix logo on a TV screen, ahead of a Swiss vote on a referendum called "Lex Netflix," in a photo illustration taken on May 9, 2022. (Denis Balibouse/Reuters)

Netflix Crackdown on Password Sharing

While CFO Richard Galanti last year hinted that there may be an increase in membership fees, so far the company has held off raising the price despite a volatile economic climate.

The latest move from Costco is similar to that of streaming giant Netflix, which has cracked down on subscription sharing across different households by requiring those who wish to share an account to pay an extra $7.99 a month.

Netflix has said the additional fee was necessary because password sharing was negatively impacting its business, with more than 100 million accounts sharing passwords, although the move initially sparked a backlash among Netflix users.

Despite the backlash, Netflix saw its subscriptions hit a record high after implementing the new additional payment policy.

The company reportedly added 100,000 new accounts on both May 26 and May 27, days after it notified users that password sharing would end, according to data from Antenna.

According to that data, the company experienced average daily sign-ups of 73,000 from May 25–28, marking a 102 percent increase from the prior 60-day average and surpassing the number of sign-ups seen during the initial start of the COVID-19 lockdowns across the United States in March and April 2020.

The streaming giant did, however, report a surge in account cancellations over that same three-day period, with the ratio of sign-ups to cancelations since May 23 increasing by 25.6 percent compared with the previous 60-day period.