Costco's renewal rip-off

If you’re a Costco member like me, sometimes you don’t shop at the big box store for months at a stretch. If your membership happens to expire during such a sabbatical, guess what happens when you renew a month or two later?

Answer: Costco automatically backdates your membership to renew on the date it expired, not on the actual date you renewed. That means you pay for membership you didn’t and couldn’t have used, because you can’t get your discount-price purchases past the cashier without a current membership.

This happened to me twice in recent years. For some reason, I let my Costco membership lapse each August in 2005 and 2006. But, like clockwork, my need for three-football-field lengths of paper towels and gallon jugs of mayonnaise eventually pressured me to renew in November. I thus retroactively paid for four unused months, a $33 waste.

Last year, I wised up, and when I renewed in November I asked that my renewal be dated as of the actual date of renewal. The counter clerk at Costco customer service was happy to accommodate me, and I patted myself on the back for being a shrewd consumer.

As it turns out, Rhonda Dupler and Tempe Evans were shrewder still. When those two residents of New York and California encountered the same backdating pick-pocket, they sued, and their cases became a class action, which has now reached the proposed settlement stage in U.S. District Court for the Eastern District of New York. Costco disputes the alleged claims and does not admit any liability or wrongdoing whatsoever, but wants to settle anyway.

Costco currently has over 53 million members. Close to 12 million former and current members were beaten out of some $40 million worth of back-dated renewals between March 1, 2001 and March 31, 2009. If you were one of them, you probably got a postcard or e-mail notice about the proposed settlement.

Terms of the deal: Your current membership will be automatically extended one to three months, a $4 to $25 value, depending on how much you got gypped and the type of membership. Former members will receive similar reparations in the form of a temporary membership. You don’t have to do anything to collect, unless you object or want to opt-out of the settlement. To find more details, check the notice of proposed settlement on Costco’s web site.

We think that’s a good deal. Class action settlements have typically awarded victims coupons that often go unused. By contrast; this settlement provides real economic value—months of Costco membership—that automatically go to victims identified by Costco’s membership renewal and payments database.

One piece of the settlement falls short, however. Prior to March, 2009, Costco automatically back-dated renewals that occurred up to five months after expiration. In the settlement, Costco agreed to shrink that to renewals of up to only two months. In other words, Costco will backdate only if you’re renewing less than two months after your membership expired. If, say, your membership expired February 1 and you renewed a month-and-a-half later on March 15, Costco will automatically backdate the renewal to February 1; but if you renew two and a half months later on April 15, that will be dated April 15.

Michael Berg, an attorney from the White Plains, N.Y. firm of Meiselman, Denlea, Packman, Carton & Eberz, estimates that Costco’s shortened renewal backdating will save members $87 million over the next seven years.

Great! But why should Costco members risk even a two-month fleecing?

The $70 billion in revenues wholesaling giant wouldn’t answer that directly, but told me that customers renewing expired memberships can ask that the back-dating policy be waived. “Because of the membership-based nature of the Company, our local warehouse managers are vested with substantial discretion to accommodate member requests in a wide variety of contexts, based on the facts and circumstances.  Our policies help guide the exercise of that discretion but do not strictly dictate all outcomes,” said John Sullivan, Costco’s associate general counsel, in an e-mail.

I think Costco should stop slapping customers in the face this way if they don’t know that they need to ask. Instead, Costco should automatically date all renewals as of the actual renewal date. If you agree, let Costco know by commenting below.

In the meantime, here’s how you can get around this rip-off when you need to renew an expired membership: Go to the customer service desk and ask that your renewal be dated as of the actual date of renewal. That worked for me.–Jeff Blyskal

Comments

[Larry]

They send you a renewal notice about 2 months before your renewal is due. There is no reason to let your membership lapse.

[Susanne Nielsen]

I agree! Let's hope Costco takes this seriously and quits doing it. I personally will remember this when renewing my membership! I hate paying for nothing.

[m808]

"There is no reason to let your membership lapse."

Excuse me? There is VERY GOOD REASON, like you dont need the products for a couple month lapse. I dont go every month! The packages are HUGE! I only need to go about 8 times a year.

[Eric]

Why should the Costco membership fee be any different than the annual fee people pay for a credit card, such as an airline mileage card? With those, you pay an annual fee whether you use the card or not.

[Cindy Kiser]

Costco should automatically date all renewals as of the actual renewal date.

[J]

I won't have to worry for this, I will not be renewing! I much more prefer Sam's Club. When you have only a couple items they can take you at the Customer Service counter. They have more that 3 lanes open at peak times...all around I think their level of customer service is much better than Costco.

[Pickles McGee]

You know, if you want to renew an existing membership then pay it on time. If you want to wait in line and purchase a new member ship every 18 months, then get in line. I don't know how Costco could make it more easy for you to join.

You sound like the crook to me, not Costco.

[Cornell]

Larry, if a member does not shop every month, there's no reason to renew automatically. Rather, if a person does not go every month, there is a very good reason to not renew it before the expiration date. My wife and I are members of Sam's. We renew at the time of the first visit after the membership expires. Sam's routinely changes the next renewal date to 12 months after the month the membership has been renewed. If Sam's can do it, so can Costco.

Eric, a membership is not a credit card and a credit card is not a membership.

[Larry]

Sounds to me like most of you should be shopping at Walmart. I go to Costco almost every week.

[Dustin]

Well, this is just going to lead Costco to charging renewal fees for any custmoer who let's their subscription lapse. not saying i agree or disagree with this, but at the end of the day, i think you will be able to waive the renewal lapse fee by backdating your renewal OR paying the renewal lapse fee. there will be no prefect scenario for non-renewers when this is all over.

[brian]

If you are worried about your $4, you need to be shopping at the dirty Sams Club down the street.

[peter]

Costco membership now costs about $50.00 per year, much if not all of which can be made up by using the discount coupons Costco provides regularly on many popular items in their warehouses. Although I've been a Costco member for about 20 years and appreciate its high quality merchandise, I fail to see why Costco feels justified in back-dating its membership fees, especially since Costco has a policy (still in effect?) that members may cancel at any time for a full refund. It seems that once a membership has expired, that should be the end of it-- that person is no longer a member, and should he/she choose to reapply for membership at a later date, then a new contract would go into effect as of that date. Please point out the flaws in my reasoning if you think Costco's back-dating policy is justified.

[Steph]

I disagree with Larry's comment, "... There is no reason to let your membership lapse."

You buy 12 months of use at a time and you don't get a discount for renewing before the current membership expires. If you know you won't visit for a few months, why pay for those months when you aren't using the service?

[Pippin]

There are times when renewing a Costco membership is an EXTRA expense. My salary has been cut twice so far this year, and if I am running short of cash when my renewal is due, then you better believe that I will pay my regular bills first and let the Costco membership lapse if necessary.

I haven't made a contract with Costco that obligates either of us for more than 1 year at a time. If my membership lapses at the end of the 1 year membership then our mutual obligation ends. If I chose to get a new membership after the lapse and I pay my fee then I should be entering in a new 1 year contract with Costco from the date I pay my fee. Simple.

[Dale]

Would you like Costco to sell you a one day membership because you want to shop there that day?? NOT!! Costco sells ANNUAL memberships....not daily, not weekly, not monthly. Should your auto insurer not charge you for the week that you were on your cruise and did not drive your car? I agree...you should be shopping at that dirty Sam's Club down the street. You don't deserve Costco.

[rob]

Does sound like a bunch of walmart shoppers on here. Seriously, the lines are long because I get behind the person whose membership is expired. The membership fee will probably go up now because everyone wants to save $8 for two months of a LOST membership and the extra payroll it will take for people who want to waste more time changing their renewal date. Isn't your time worth more than that to you than to have to stand in line to get your renewal date changed because you didn't renew your membership on time.

[Earl]

When Costco did backdate them up to 5 months if you shopped with your expired card the cashier could just tell you it was expired but they alone could still let you shop. People would do this for months. Now that this lawsuit happened if you come up to the register and your card is expired the cashier can do this one time you let you know but the next time you come with that expired card you must renew on the spot or leave with nothing and this makes people mad. This is why the backdating was never a problem people would shop for months with expired cards.

[beaner]

We do not have Costco in our area, but BJ's has been doing the same thing for years. As infrequent shoppers, we agree with m808 and others who see the benefit of maximizing their membership by letting it lapse. My partner & I found the solution to BJ's backdating policy was to alternate whose name the membership was in.

As to Eric's comment, we use a credit card with no annual fee, but we haven't yet figured out a way to avoid paying the warehouse fee.

[Bram]

How can you say they are justified in backdating fees! It's the same principle as subscribing to a magazine. If my Consumer Reports subscription ends, they better not charge me for the month I didn't get the magazine if I wait to renew. Likewise with Costco, I couldn't shop at the store during that time period so they better not charge me for it.

[Ken]

Backdating is wrong since you did not use the service do the lapse in membership. If you compare best business practice, Sams Club do not do this. They politely inform you of the expiration date when you get near it, you take a few months until you need to stock up again then you renew it at that time, no muss no fuss.

Costco is treating this like an insurance coverage where you are required to maintain continuous coverage. They are implementing quite a few of these NOT SO BRIGHT ideas to fatten up their bottom line.

The best feedback to Costco is to walk up to the customer service desk and cancel your membership citing the reason why.
I have done this when they gave me grief about splitting my purchases so I have different receipts for business purchases and for home purchases. Their NOT SO BRIGHT reasoning then was they were discouraging members buying for their friends and neighbors even when I was the only person in line. They have since rescinded that error in judgement.

If you live in an area that does not give you a choice for other warehouses like BJ's or Sams Club and they do not honor your request to correctly date the renewal, cancel the current one and start a new one. That ties up their resources while you give them the evil eye during the entire process.
They lose customer satisfaction and lose manpower with the workaround, in the words of Jeff Foxworthy :" COSTCO, HERE'S YOUR SIGN..."

Remember, be nice until nice don't get it done.

Cheers.

[Barry Brown]

has anyone ever checked the supermarket prices? I do better then Costco/Sams club/ etc. For example, Bumble Bee solid tuna is on sale this week at Stop and Shop for .99 cents. no limit. Costco has an eight pack (same size) for $10.94. Hellmans mayo(30 oz) is on sale at A&P for 2/$5.00. And i have .50 cent coupons that they double. Costco has a gigantic size (that is not low fat) for double the price(unit price). It's the same for ice cream, paper towels, meats. Shop rite has rib steaks in individual packs for $3.99 per pound this week. Also Hannaford has their own brand of peanut butter (18oz) for .99 cents. You have to watch the sales and read the ads and have these stores near you. I quit sams club and there are no membership fees. I go in the stores around 9:30 am (I work as a police office and start my shift at 3:00 pm so i have the a.m. to do this.) You just have to have patience and time. Also I get rain checks for out of stock items. Just in, A&P had 6 oz. cups of Dannon yougurt 10 for 3.99 plus use the $1.00 off coupon on five cups in last sundays paper. Also on Wednesday, both A&P and Shop Rite have $5.00 off coupons on $30.00 purchase in the local Westhester newspaper. I am waiting to shop on Wed. a.m.!!That's another trick, I wait until Wed to start shopping because of these coupons. They started this couponing about 3 months ago and are still doing it. Also the produce is sale priced at many stores. This week honeydews are 2.29 at Hanafords, nectarines are .99 per pound at A&P and iceburg lettice and blueberries are 1.25 each. All these stores are within 6 miles of my home, so maybe im lucky

[wade]

Sam's Club do the same they allawys backdate me membership, no matter when I renow it. Does the judjment include Sam's Club

[Tank Justice]

It's crooked period!

[JimmyDaGeek]

BJ's does the same thing.

[Rhonda]

I was thinking about getting a new membership. This helped me in my decision making. Thanks for the warning!