Costco Million$ Lost Spurred Return Policy Rip

Like momma always said, if you don’t stop using that thing, you’re gonna break it… and Costco Chief Financial Officer Richard Galanti says the same of the cash-and-carry retailer’s decision to limit its generous return policy for electronics.

The change was implemented because the company was losing “tens of millions of dollars” in returns, Galanti said….

Galanti said one of the reasons for the policy change was Costco members would buy big-screen TVs and then return them months later, when newer and less expensive models went on sale.

He said the practice had become so prevalent one member recently wrote the company saying she was disappointed because she had heard Costco was going to stop its “free TV upgrade policy.”

…The new two-year warranty is not in addition to any manufacturer’s warranty. For example, if a computer company provides a warranty for six months, then Costco will cover the warranty for the next 18 months, Galanti said.

“Warranty does not mean we will replace it if it’s run over by your car,” Galanti said.


Costco to limit money-back returns on electronics [Seattle-PI] (Thanks to Annie!)
(Photo: tellumo)


Edit Your Comment

  1. ElizabethD says:

    LOL @ “free TV upgrade policy.” Nice try.

  2. esqdork says:

    Leave it the people who abuse a good thing to ruin it for the rest of us.

  3. zentec says:

    I’m not surprised many customers went beyond the spirit and intent of Costco’s return policies. While bad corporate behavior can never be condoned, neither is this kind of behavior.

    As usual, a few nitwits spoil it for everyone else who lives within the rules.

  4. While renewing my membership I saw someone trying to return DVDs to a Costco. The DVDs were ones that Costco carried and they were still in the plastic wrap. The person had no receipt and the stickers did not match those used by Costco. At one point the customer even said that they “might not” have bought them at Costco. They probably bought them for less money and were trying to make a few bucks off of the transaction. IT almost makes me want to start a website called to fight bad cunsumer practices.

  5. Daytonna says:

    I would have to agree with you Zieak, only thing worse than a Company shafting consumers, is an individual deliberately shafting/steeling from the company, through return fraud, or any other means.

    The main reason I hate when people do these things is because the company simply shifts the cost of the fraud to its honest consumers. Either through price increases, or through the halting/changing of good consumer policies.

    In fairness to Costco though WAY TO GO! Extending/honoring the manufacturers waranty to two years kicks butt! My next big electronics purchase will be from Costco.

  6. karmaghost says:

    Honestly, as awesome as Costco’s policy was, I’m amazed it lasted so long. From a business standpoint, it was kinda stupid.

    I work part-time at a grocery store (which will go unnamed) that has a pretty liberal return policy. So much so that people will go to Wal-mart, buy products (especially kitchen appliances) and return them to us, without recipes. We give them store credit for the value of the item, but they can make crazy amounts of money off of the returns sometimes. A lady once returned a $99 coffee maker that Wal-mart or Target sells for $49.99. That’s almost $50 in free groceries!

  7. zingbot says:

    Wasn’t there a SNL skit about that a few years back? “Those who ruined it for the rest of us.” I think one of the characters was the first person to not pay for gas and just drive off, etc.

    “Free TV upgrade Policy” wow.

  8. zingbot says:
  9. medalian1 says:

    This was the main reason for me to have a costco membership. They’re 40 miles from my house -vs- 5 for sams crap club. So I don’t forsee myself renewing my membership :(

  10. Chris says:

    What was the reason? Screwing them on electronics? (Am I missing something?)

  11. jitrobug says:

    Actually, maybe it’s just that the risk of buying an off-brand tv (vizio) was mitigated by the extra safety of costco’s policy.

    I guess they’re still a little better than other companies, but it loses that lock they had on my psyche that when I get a big flat expensive tv, it will definitely be from costco.

  12. exkon says:

    Damn the people that just return everything likes a damn wal-mart.

    I have to agree with the general consenus of the group that sometimes sometimes we’re just bastards and want to cheat a company.

  13. poornotignorant says:

    @Daytonna: I always hate when consumers blame (higher) pricing on things like consumer fraud and shoplifting. Pricing is set on what the market can bear, not on expenses. If that was the case then it seems to me that the salaries of CEOs(another subject)is to blame for overpriced goods.

  14. SOhp101 says:

    Good for Costco, honestly. They need to draw the line somewhere, and they’re STILL offering a 2 year warranty on any electronics you purchase. This will minimize the abuse but it will still help the customers who have legitimate problems past the 90 days. If you purchase with an AMEX card it should add ANOTHER 1 year warranty to your purchase.

    BTW, if you ever buy anything Kirkland Signature (Costco Brand) and you don’t like it for ANY reason, you can return it no questions asked. It’s part of their guarantee. Then again, most ‘store brand’ products have the same guarantee as well.

  15. DutchFlat says:

    I knew a guy who bought a laptoop from Costco and used it for eighteen months. Then returned it.

    Unfortunately, as so many other commenters have said, a few bad apples had to spoil it for the rest of us. I don’t often side with Costco, but this time, they’re doing the right thing. Everytime some dickhead returns something to make a profit, or whatever, Costco loses money. Then, ultimately, we all, the legitimate customers, lose money.

  16. Starfury says:

    A friend worked at Costco many years back. He’d have customers buy a new PC, remove the memory/CPU and replace them with lower grade components and return them. He also had people buy a laptop, use it for 11 months and then return it. I don’t have a problem with a 90 day return policy but then I’m not the kind of person that takes advantage of Costco.

  17. alu says:

    any idea if this also applies to Xbox 360? and did it go into affect for the whole country on Feb26 or just Cali, with the rest of the country following in March?

  18. erika says:

    as a person who has spent about 8 years of my life working off and on for various retail establishments i can honestly say that there are more than just a few of those rotten apples. . . some gems:

    working at a record store we’d frequently (at least once a day) get people trying to return their by 12 cd’s for a penny record club discs for store credit.

    working a a men’s clothing store we would get several customers every day who would try to return clothing that was over laundered, over startched, and several years old. when we’d be nice and tell them we could give them a percentage of the orginal price in credit they’d throw a fit.

    as for shrinkage and such being blamed for higher prices, i think it does have an effect. if a company has to spend more money on loss prevention, policy changes, and the like, how is that not going to affect what the consumer pays? sure, greedy companies do stretch it to the limit and use that as an excuse to charge a lot more but you can’t say that consumer fraud does nothing.