Costco Makes It Harder to Share

 

Costco Makes It Harder to Share Membership Cards

Bulk retailer asking for photo identification at self-checkout registers

Costco COST 0.47%increase; green up pointing triangle Wholesale is cracking down on card-sharing. 

The largest wholesale club in the U.S. by location, which requires customers to pay for an annual membership to shop in its stores, is now asking to see photo identification along with customers’ membership cards at its self-checkout registers. 

“Since expanding our self-service checkout, we’ve noticed that nonmember shoppers have been using membership cards that do not belong to them,” the company said in a statement. “We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members.”

The bulk retailer is one of the latest companies to try to rein in sharing of paid memberships. Netflix implemented limits on password sharing last month as the streaming giant faced slower growth. Subscriptions jumped after the company restricted each account to be used only by those living in the same household.

According to Chief Financial Officer Richard Galanti, the rising number of individuals who weren’t cardholders making transactions at self-checkouts first came up at an operations meeting a few months ago.

“It’s a really small percent of members who are doing it,” he said. “But when you’re dealing with millions of transactions, even a very small percentage is something you would want to correct.”

Galanti said Costco wrote the company statement about membership crackdowns last week, when media outlets began making calls to ask about it.

“I think the story is bigger than the issue,” he said. “The story seems to have taken on a life of its own.”

The company recorded sales of $222.7 billion in its most recent fiscal year. Membership fees, which are reported separately from total sales, reached $4.2 billion, a 9% increase from a year ago. 

The company said its policy of asking for membership cards at checkout hasn’t changed. Customers pay $60 annually for a Business or Gold Star Membership, or $120 for an Executive Membership, which includes 2% cash back on some purchases. Each plan comes with an extra card that members can assign to one other person in their household. 

Costco said its membership fees help offset expenses, allowing the company to offer lower prices to customers. ​​

The company has more than 69 million paid members, according to a securities filing for the quarter ended in May.