Personal Finance

Is Costco’s Lifetime Return Policy a Scam?

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This article is about my experience with Costco’s purported lifetime return policy. But first, let’s review. Last week Michael published an article about how he stole $45 from Costco. He felt terrible about what he had done and wanted readers’ views on the situation. Most people felt he did the wrong thing, myself included. But what was particularly surprising to me was the venom in a few of the comments. Here are two examples:

“Coward. I am unsubscribing from your blog because I will not seek financial advice from someone of questionable character. That’s what this is about. Not $45. Not whether or not Costco will miss the money. Not to whom you should donate the money to atone for your misdeed. Not how lucky you are for this found money. Knowing the truth, you intentionally deceived Costco in order to avoid paying for those goods. That was the point that you crossed the line. You can still make things right, but you are choosing not to do so because you are embarrassed. Your principles are compromised. . . . May the dishonesty you’ve demonstrated be returned upon you 1,000 times. Coward.

As a senior manager, it is very depressing to see your lack of anonymity towards the cashier and member service employee you embarrassed. I can not imagine how they must feel. The sad part is you knowingly walked out with unpaid merchandise and failed to make it right. To make matters worse we know who you are. Every time you shop your card will be flagged (beware of possible theft). At no point will you be approached. Yet, we will be watching you from this point forward no matter which Costco you shop. Thank you for the heads up XXXXX”

So if a $45 error gets people this upset at Michael, then the story I'm about to tell will really upset them.

Costco's Lifetime Return Policy

A little over two years ago we bought our son an electric piano from Costco. It cost about $1,300. Earlier this year he told me he wanted a different piano, and he asked if he could return the piano to Costco and buy a new one. When I explained that it had been nearly two years since we bought the piano from Costco, he told me they have a lifetime return policy. To be honest, I didn't believe him.

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So I called Costco. Sure enough, with some exceptions, Costco has a lifetime return guarantee. At least that’s what the Costco representative told me on the phone. So I went to costco.com to check out the return policy, and here’s what it says:

Merchandise: We guarantee your satisfaction on every product we sell with a full refund. The following must be returned within 90 days of purchase for a refund: televisions, projectors, computers, cameras, camcorders, iPOD / MP3 players and cellular phones.

Sure enough, there is no time limit on returns except for a few electronics listed above. So the next day I called back to start the return process. The Costco representative pulled up my purchase, confirmed that it was eligible for return, and told me somebody would contact me in the next 7 to 10 days to schedule a pickup of the piano. Later that day we ordered his new electric piano from Amazon.

And then I received the following e-mail:

Costco is dedicated to offering the best products at the best prices to our members. We recognize that in rare instances there are defects in products that we sell, or a member may decide that they purchased the wrong item for their needs. Our return policy is the most lenient in the marketplace to accommodate our members in these instances. Several conditions are evaluated when considering a return of purchase; reason for return, membership history, return history, date of purchase and price of purchase.

Recently, you contacted us to request a return for the item listed above. We make every effort to accommodate the needs of our members, however based on your original purchase date and the reasons listed above, we will be unable to honor this request.

Sincerely, COSTCO WHOLESALE

I've left out the name of the Costco representative who signed the e-mail. The most interesting part of this e-mail is the following: "Several conditions are evaluated when considering a return of purchase; reason for return, membership history, return history, date of purchase and price of purchase." Compare that sentence to Costco's return policy and you'll see a stark difference. I guess they tell you one thing when you are buying stuff from them and another thing when you are returning stuff to them.

Quite annoyingly, no phone number was included in the e-mail so I have no way of calling the person who sent the message. So instead I call back the number used for returns. The Costco representative tells me that returns older than 2 years are not accepted. I pointed out that (1) that's not what I was told when I first called to inquire about Costco's return policy, (2) that's not what I was told when the representative processed my return, (3) that's not what Costco's return policy says, and (4) the piano was purchased less than two years ago (by just a few days).

She had no response and told me my only recourse was to respond to the e-mail Costco had sent me. So I replied to the e-mail six days ago. So far I've received no response.

Now, it seems utterly crazy that a company would have a lifetime return policy. But with a few exceptions, that’s the business policy Costco has decided to adopt. It no doubt is part of a business strategy that is very consumer-friendly. But when you don’t honor your own policy, what started out as consumer-friendly becomes just the opposite.

So my question is simple--what should I do?


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