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Jul 16, 2009 -- Costco settles lawsuit over membership renewal practices

Costco has settled a lawsuit over its membership renewal policies. Clark's favorite warehouse club admits to back-dating renewals to the date of expiration. that means they were essentially cheating customers out of time on their memberships!

Under the terms of the settlement, Costco will offer customers who were affected from March 2001 to March 2009 up to 3 months of free membership going forward. Look for a postcard or e-mail in the coming weeks to let you know if you're eligible.

Meanwhile, a new university study done jointly by Harvard Business School and Columbia Business School reveals that customers often buy more than they intend at warehouse clubs.

A university study was necessary to determine this?! Clark could have easily told you that!

For example, executive producer Christa and her husband are on a spending freeze. Yet they couldn't resist a Flip Ultra HD for $199 during a recent Costco outing. Now they're selling some of their belongings on eBay to balance out the unexpected $199 expenditure!

Want to avoid unnecessary purchases at the warehouse clubs? Shop without a cart! Clark only buys what his arms can carry and has lowered his bill dramatically as a result.

Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.

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What others are saying

  • Costco is the best
    We love our Costco in Austin, TX. We really don't have a good grocery in our town, and we can't beat some of the deals here on food. We are careful to make a list, and stick to it when shopping there, and purchase only what is on our list. There are some things that we now purchase only 3x year because we got such a great deal on it at Costco. Plus, I couldn't beat the price on 2 pair of glasses - $400!!
  • Costco Membership
    Costco is not for small spenders. You will not make out good that way. If you have a family, get the Executive membership and fill that cart up. The CASH BACK of the Executive membership will practically pay for the membership in most cases. We only shop there every couple months and our cash back was $88 the first year. The membership fee is $13, and I saved that much today on 2 cases of 5 hour energy drinks ($1.40 per shot compared to $2.99 or $3.99 everywhere else!) You have to know your prices anywhere you shop because NO WHERE and I mean NO WHERE is every item the cheapest. Oh and Gabe, you need more information about shopping effectively at a warehouse because your claims are ALL FALSE!
  • More than you can carry!
    Clark, I really like your principals and the methods to your madness. HOWEVER, to buy so little at a warehouse club Defeats The Purpose! Adopt a Real Philosophy on this one and PLAN AHEAD!! My family and I shop at Costco about 6 times per year, spending about $300-$450 each time on a wide assortment of items. Most items last longer than the 2 months and we keep a great stockpile in our basement of SUPER SAVING non perishible food items. We compare prices to that of the grocery and save nearly 50% on these items. Plus the CASH BACK at Costco really helps out too. Additionally we get our tires rotated for free each time we visit and with our 2 cars that gets us a rotation every 4 months which is great for the life of the tires, and its free!! We always take advantage of the hot dog combos and pizza for super cheap too! My wife gets like 12 packs of Lean Cuisine for like 45% off! We stock up big time and all we get at the normal grocery store is bread and milk and fruit and veggies when on sale. We love Costco and feel that we have more stuff than we normally would for LESS money as a result of our carefully mapped out spending sprees! Thanks for reading and please, get a cart and save money!!!
  • great, now if they could . . .
    . . . just get the prices down to what I already pay with zero membership at my super-walmart!

    Costco and BJ's are for suckers. Honestly, if you have a membership there you need to do your price shopping again. Be sure to calculate for per unit prices. I seriously considered joining both of these chains this summer but after price shopping I figured out I'm already paying less, in some cases a lot less, for the items I usually buy. Plus I don't have to buy cereal by the truck load at wal-mart.

    If you've got to belong to one of these clubs then at least join Sam's. Their prices are a little, albeit not a lot, cheaper than wal-mart's regular stores. So, if you've absolutely got to be a "member" Sam's is the only reasonable choice. Otherwise you're paying an annual premium for the opportunity to purchase three times as much of an item at a higher per unit cost. Genius, right?

    Seriously, don't write this one off if you're a member. Shop the prices. Pick 30 - 40 items and write them down, item, quantity, price. Then drive right over to wal-mart.

    And lets be honest here, it's not like you're shopping costco for the great environment. If you can handle costco/BJ's, you can certainly handle wal-mart.
  • costco renewal
    I just had the same experience! I only shop at Costco every 3 months or so. My membership expired in april and I renewed in July and they back billed! If they settled why are they still doing this?
  • Costco
    I like to shop at Costco, but I don't go overboard. I use their coupons, and try to avoid multi-packs of stuff that I don't need a cart-full of. I also carry a list; but I also fall victim to impulse buys.
    I like Costco because:
    - The name-brand products they carry are of good quality.
    - Their house-brands are good or better, & are a better value.
    - Their product return policy is very liberal - basically, if you don't like it, your money back.
    - Many of their locations are union shops, & are happy to be working there, which shows in superior customer service.
    - Costco management seems to respect their employees.
    By the way...
    - I also use coupons at grocery stores + a list + stock up on sale items.
    - I shop "dollar stores", too!
    - I refuse to shop Wal-Mart or its Sam's Club because of the way the company treats its employees.
  • Costco
    LOL - I'd love to see Clark walk out with a pack of toilet paper which leaves no room for anything else in his arms. Guess he'll have to come back for more the next day. But, wait, he'll be burning more fuel as he didn't get all the stuff he couldn't carry during his first visit. Sorry, Clark - I'm not buying your argument when it comes to shopping at big box stores ;-)
  • SAM"S CLUB
    WHEN MY CREDIT LIMIT WAS DROPPED BY 500.OO WITHOUT MY KNOWLEDGE.THE REASON THEY GAVE WAS THAT I WAS OVERSPENDING..I ASKED THEM TO CLOSE MY ACCOUNT..I HAD BEEN PAYING THEM ALMOST 4 TIMES MORE THAN THE MONTHLY PAYMENT..DAY AFTER RECEIVING THE STATEMENT..BUT EVEN THO I TOLD THEM TO CANCEL EVERYTHING..THEY ARE STILL TAKING OUT A DEDUCTION OUT OF MY PAYCHECK EVERY TWO WEEKS..I CALLED THEN I WAS TOLD I HAD TO GO INTO SAM'S TO THE CUSTOMER SERVICE..TO GET THE PAYROLL DEDUCTION STOPPED..WHY..DOES ANYONE KNOW WHY OR WHAT I CAN DO TO STOP THE PAYROLL DEDUCTION..I TALKED TO MY HR AND I WAS TOLD THE SAME THING..I WANT THEM TO REFUND MY MONEY IF POSSIBLE..ANY SUGGESTIONS...
  • Christa
    Sounds like your producer Christa works on the show, but doesn't listen to it. :-)
  • Costco
    Are we nuts? WE pay the store just for the honor of getting in the door? Shouldn't THEY pay US to shop there?
  • Sam's renewal
    I renew our Sam's Club membership by mail. The invoice lists the expiration date and the renewal starts from that date.
    Doesn't make any difference when the payment is sent. Of course, I do not send TOO early!
  • Money management skills
    I work for a non profit credit counseling agency that helps consumers learn how to manage their money and get out of debt. The biggest reason that our clients have a debt problem is the lack of money management training or skills. Having a budget and being prepared for an emergency can make the difference for most folks. Take the time to organize your finances and only buy what you need and can afford
  • Saving Money
    I save more money by making a grocery list of only what I need (plan meals) then shopping at grocery stores by clipping online coupons, ecoupons and buying the special markdowns and sore brands. Also, check out couponmom.com and you can get the stores list of what is on sale plus it lists all the coupons. I save alot of money. This week I saved over $50.00. These warehouse stores do not take coupons and I'm going to spend money to joine a club to get supposely cheaper prices. That defeats the whole idea of getting discounts. Why spend money to join something!! Phooey!!
  • Membership Renewals
    Try this - don't renew membership (or magazine subscriptions) without finding out what deals there are for new memberships. I have found that new memberships often have a longer term than a renewal (three to six months), and have coupons to use on your first purchase! This happened when I checked at BJs for the heck of it and got a new membership (I didn't fib about anything, they didn't say anything about my expired membership when putting in my info) and got 18 months for the price of 12. The next year I got 15 months and $25 off my first purchase of over $50.

    Magazine subscriptions - the same thing. I have a subscription to a woodworking magazine for which I was a charter subscriber back in 1979. I faithfully renewed my membership until once in the 90s I noticed their card in the magazine offering a significantly lower price for new subscribers. I complained and got that price. I found I had to do that every year until one year I just submitted a new subscription on line and they took it!
  • Expiration Dates on products
    After a recent purchase of printer ink at Costco, I noticed the expiration date was only 4 months away, on my next trip I observed this on other products as well, it appears that Costco buys products that are near their expiration dates for retail. Be sure and check before you buy..
  • membership fees
    Several years ago, I wanted to renew a couple of months after my membership expired - as I hadn't been to Costco in those 2 months. The female at the desk said that the renewal would start on the date it expired (2 months prior). She said, "it's like when you renew your car insurance." I said, "I need my car insurance - but I don't need Costco." Glad Costco was made to realize this. Costco is my favorite store & I shop there monthly.
  • Costco Bargins
    You can't go wrong most of the time when buying in bulk. Their coupons offer breaks on items that most stores don't provide. I just received a $9.00 break on diapers, what a deal. Plus the freebies are worth the trip.
  • Costco
    I can appreciate your no cart policy, however the most expensive items in the warehouse don't require a cart. Doing inside marketing for Costco; it amazes me how many people can't refuse walking by the jewerly counter, and of this % how many take the next step & purchase a piece.
  • Costco has Great Values
    As retired grocery store manager I can can tell you warehouse clubs offer great value. Look at gross margins (mark up)of the competition.

    Dept stores over 50%, discounter like Wal Mart 25% - 30%, grocery stores 25% - 30%, Costco under 15%.

    I save $2 -$3 a pound on better steaks at Costco, same mozzarella balls are 1/2 price of Publix. Grocery stores use loss leaders to hook you then nail you with other items on your list.

    I'll keep my Costco membership thank you.
  • Warehouse clubs are little China
    Next time you shop, try to find something at Costco or Sam's that is NOT made in China, goos luck, but a sad state of affairs when all our manufacturing is going overseas.
    On a positive note, the beef prices are a steal vs. the local grocery store.
  • Costco
    What I have noticed at Costco is that there are some really good deals every time I go, and also some not so good deals. If you go in there thinking everything is a great deal, you are wrong.
  • Sam's club
    Ok, Target had on sale 2 Pur water filters for $22.00, Sam's club 4 pack $39.87, So on sale at Target #11.00 each, Sams $9.96 each, So $1.04 less at Sams, all will be used
  • bj's club
    Was shopping there last week and commented to the cashier that they should rename the store to "the one hundred dollar store" because you never leae with spending that much or more.
  • Sam's Club does something similar
    When I last renewed my Sam's Club membership, I was going to do it a few weeks before my membership actually expired. When I asked to do that, one of the employees there said that I should wait, because if I did it early, my next expiration date would occur as of the date of the new renewal. He said I would lose any time that remained on my current renewal, in this case, a few weeks. Something to be aware of.
  • Warehouse club illusion
    None of the warehouse clubs are a good deal. By packaging in multipacks & inflated sizes they magically make people forget all the math and grab stuff. Nothing there is a good deal, compared to other places and it is not an option today to shop for everything in one place. Have to be creative and visit more than one.
  • CostCo Shopping
    Ever try shopping with a list! Mom and dad knew how to shop and still live within a budget.
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