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Costco Cracks Down On Membership Sharing With New Card-Scanning Rules

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5 months ago

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Costco Cracks Down On Membership Sharing With New Card-Scanning Rules

Topline

The membership-only bulk shopping store Costco is rolling out new entry rules that will require members to scan their card at the shop and, in some cases, present photo IDs in an attempt to stop people from shopping using someone else’s membership.

Key Facts

As it stands now, shoppers entering Costco usually quickly show their membership cards to someone working at the front of the store and are allowed to proceed inside, not presenting their card again until check out (much of which is self-service).

But in the coming months, the store said in a post to its website, people will have to physically scan the barcode on their cards via a machine that will pull up the member’s account—and the photo associated with it to verify their identity.

If the account doesn’t have a photo, the person will be asked to present a valid photo ID matching the name on the membership card.

Non-members will still be able to enter the store to shop with members, but the new rules will crack down on people giving their cards out to friends or family and allowing multiple households to shop using the same membership.

There are two types of household Costco memberships—a Gold Star membership that costs $60 annually and an Executive membership that costs $120 and comes with 2% rewards on qualified purchases (both allow two people to be registered members).

Costco first started testing the new system at a handful of stores in January.

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Big Number

119 million. That’s how many cardholders Costco had in 2022, according to ABC. It made $4.2 billion in membership fees that year.

Key Background

Costco is just the latest membership-driven service to toughen its rules when it comes to sharing accounts. Netflix last year implemented a new password-sharing crackdown that prohibited use of an account from outside the account holder’s household. Now, if someone signs into an account from a location that isn’t registered as “home,” the streamer registers that change and, after a while, will cut off access. Non-household members can be added to an account for an additional fee that is still cheaper than buying an entirely new membership. Netflix said it added 9 million new subscribers between when the new policies were implemented at the end of May through last October. Disney+ has said it plans to do the same this September, and will start charging extra for members who share their account. Sam’s Club, another bulk shopping warehouse and direct competitor to Costco, has implemented a new digital membership card system that makes it harder for members to share with outsiders. Members can still get a physical card if they request one, but the norm is now to set up an account on the Sam’s Club app, which cannot be logged into simultaneously on multiple devices.

Further Reading

ForbesCostco Is Beyond OvervaluedBy GuruFocus

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