Lawmakers Demand Answers From Costco Over Sale of Surveillance Equipment Made Using ‘Banned Chinese Components’

Rep. Christopher Smith and Sen. Jeff Merkley questioned the retail giant’s continued sale of Lorex products, which have been linked to human rights abuses.

Shoppers walk out with full carts from a Costco store in Washington, on May 5, 2020. Nicholas Kamm/AFP via Getty Images

Two bipartisan lawmakers are demanding answers from Costco over its decision to continue selling Chinese-manufactured security products that have been linked to human rights abuses and cybersecurity risks.

In a letter dated Oct. 31, Rep. Christopher Smith (R-N.J.) and Sen. Jeff Merkley (D-Ore.) questioned the retail giant’s continued sale of Lorex security products, noting that the company previously had ties to China-based company Dahua, whose products are restricted in the United States by the Federal Communications Commission (FCC).

Lorex is a former subsidiary of camera maker Zhejiang Dahua Technology, a China-based company that was added to the U.S. trade blacklist in 2019 because of the Chinese Communist Party’s (CCP’s) treatment of Uyghurs and other predominantly Muslim ethnic minorities.

The U.S. Department of Commerce, in placing the company on the blacklist, stated that it and other entities “have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups” in China’s Xinjiang region.

The FCC last year banned the sale of new telecommunications and surveillance equipment made by Dahua, citing an “unacceptable risk” and national security concerns.

Dahua sold Lorex earlier this year to Taiwanese-based company Skywatch for roughly $72 million.

However, in their letter to Costco CEO W. Craig Jelinek, Mr. Smith and Mr. Merkley said Dahua still supplies all the component parts for the Lorex cameras and other surveillance equipment.

The continued sale of Lorex security equipment throughout the retailer’s stores allows Dahua to profit from the U.S. market despite its equipment being banned from U.S. government use, they argued.

"Dahua Technology" camera at MTR Kowloon Tong Station in Hong Kong, in a file photo. Song Bi-lung/The Epoch Times

‘Invasive Surveillance Technology’

The lawmakers went on to note that Costco’s competitors, including Best Buy, Home Depot, and Lowe’s, have all discontinued the sale of Lorex products, citing human rights and ethical sourcing concerns.

This makes Costco’s continued sale of the equipment “all the more puzzling and seemingly in conflict with your company’s stated commitment to the United Nations Guiding Principles on Business and Human Rights and the International Bill of Human Rights.”

Costco’s Code of Conduct prohibits human rights abuses in its supply chain.

The lawmakers also went on to note that the U.S. government had linked Dahua to the genocide of the Uyghurs and other predominately Muslim ethnic minorities in Xinjiang Uyghur Autonomous Region (XUAR).

“Dahua developed alert and tracking technology that allows police to identify ethnic Uyghur faces and deploy invasive surveillance technology, such as Wi-Fi sniffers,” they wrote. “Dahua also co-developed ‘ethnicity tracking’ technical standards within China that predict the probability an individual is a Uyghur, Tibetan, or other ethnic group.

“We should all agree that in a national security state like the PRC [People’s Republic of China], Dahua’s efforts to help track and identify ethnic minorities are particularly noxious and should be condemned. American consumers should not be subsidizing a company actively enabling the PRC’s atrocities, including imports of goods made with forced labor in the XUAR.”

Critical vulnerabilities also regularly discovered in Dahua products pose a known security risk to U.S. customers, too, the lawmakers argued, noting reports of “unauthorized viewing of video and audio feeds and archives, as well as unauthorized network access and remote tampering with settings.”

A Dahua Technology thermal imaging camera is seen during a demonstration of the camera at an office in San Francisco on April 24, 2020. Nathan Frandino/ Reuters

Seafood From Chinese Firms ‘Using Forced Labor’

Dahua has denied claims that it shares any data and stated that its products are safe.

However, the lawmakers noted China’s 2017 National Intelligence Law that requires companies, including Dahua, to support the CCP’s intelligence work, meaning that they’re unable to withhold data collected from Chinese authorities, should they request it.

Thus, the lawmakers requested that Costco hand over an array of documents and information including an explanation as to why it hasn’t stopped selling the Lorex products and how its sale of the equipment complies with U.S. restrictions.

The lawmakers also asked Costco to provide details—including the audits and risk assessments it uses—to “justify” its sale of seafood from Chinese companies that allegedly use forced labor to catch and process seafood for U.S. consumers, citing recently published research by The Outlaw Ocean Project.

According to that research, ethnic Uyghurs are being relocated and forced to work in processing facilities operated by an array of Chinese firms, with the seafood items making their way onto the shelves of U.S. retailers, including Costco, Kroger, and Walmart, among others.

In response to the claims made in the Outlaw Ocean Project report, a spokesperson for Walmart told The New Yorker that the company “expects all our suppliers to comply with our standards and contractual obligations, including those relating to human rights.”

A spokesperson for Albertsons told the publication that it would stop purchasing certain seafood products from Canadian importer High Liner Foods, which reportedly worked with Chinese suppliers.

Costco and Kroger didn’t respond to The New Yorker’s request for comment at the time.

Responding to the lawmakers’ letter, a representative for Costco told The Wall Street Journal, “We are currently reviewing the letter, and we will respond in due course.”

Representatives for Costco didn’t respond by press time to a request by The Epoch Times for further comment.