Costco is cracking down on sharing membership cards

By Nathaniel Meyersohn, CNN

New York (CNN) — Some shoppers are buying Costco’s $4.99 rotisserie chickens and paying at self-checkout. The problem: They aren’t all members.

Since Costco has expanded self-checkout, the company has noticed that non-members have been sneaking in to use membership cards that don’t belong to them. The warehouse club retailer will now ask for shoppers’ membership cards along with a photo ID to use the self-checkout registers – the same policy as regular checkout lanes.

“We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members,” Costco said in a statement.

Costco had around 66 million paid members and 119 million cardholders in 2022, making it one of the largest membership clubs in the world. Costco members pay either $60 for a regular membership or $120 for an executive card every year to shop at clubs.

The company has not raised the cost of its membership since 2017, despite rivals such as Amazon and Sam’s Club raising their membership fees. Costco has hinted it may soon raise its membership price.

This membership model is crucial to Costco’s business, which has boomed during the pandemic.

The fees help boost the company’s profit and offset expenses, allowing Costco to keep its prices down. Costco is known for offering some of the lowest prices in the retail industry.

Costco made $4.2 billion in membership fees in 2022, a 9% increase from 2021. The company’s renewal rate was 93% last.

Any changes to membership growth or renewal rates could hurt Costco and force it to raise prices.

“The extent to which we achieve growth in our membership base, increase the penetration of Executive membership, and sustain high renewal rates materially influences our profitability,” Costco says routinely in its annual filings.

Netflix has also recently cracked down on members sharing passwords.

Netflix previously turned a blind eye to password sharing because it was fueling growth, but all those non-paying members were hurting Netflix’s bottom line. It has previously estimated that more than 100 million households worldwide share an account.

Early results indicate that Netflix’s new policy is paying off.

The streaming service has seen its biggest jump in new subscriber sign-ups as a result of the crackdown since the early days of the Covid-19 pandemic in 2020 when people were stuck at home binging content on the platform.

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