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Costco sued for seeking refunds on tariffs customers paid

94 points by AdmiralAsshat 7mo ago

petcat 6mo ago
> Instead of reimbursing the customers who paid more for goods, Costco said on a March 2026 earnings call that it plans to use tariff refunds to lower future prices. > That plan enraged customers who joined Costco based on the proposition that Costco would operate on the slimmest possible margins to ensure they never pay more for goods than Costco can afford to sell them. I feel like Costco is generally a pretty good company, but this is a wild fantasy when dealing with any commercial entity with a fiduciary responsibility to shareholders.
- redserk 6mo ago
  Fiduciary duty is fun to define because I’d bet it could be argued both ways here. If you want to consider Costco’s low margins as a core factor as to why consumers choose them, opting for a decision that makes their customer base run off wouldn’t be very responsible to shareholders. Consider the Target backlash last year. They’re since down 14% vs Walmart (up 30-ish%). Regardless of anyone’s political beliefs, I don’t think a 14% loss seemingly caused by behavior that a segment of customers considered hostile is thinking of the shareholders.
  - petcat 6mo ago
    Right but they're not being sued by their shareholders, they're being sued by a handful of customers and "on Behalf of All Others Similarly Situated".
    - JumpCrisscross 6mo ago
      > they're being sued by a handful of customers To be fair, they’re being sued by customers who were marketed memberships.
      - zugi 6mo ago
        To be really fair, they're being sued by lawyers hoping to take 50% of the proceeds, or 50% of some settlement that they get by shaking down Costco via threats to its reputation.
        JumpCrisscross 6mo ago
        > To be really fair, they're being sued by lawyers Is that the case history? Or bullshit assumption? Because this looks plaintiff sponsored.
        zugi 6mo ago
        Adding "bullshit" to a sentence does nothing to hide this kind of ambulence-chasing vulturism and exploitation - in fact it rather highlights it. I mean, one of the legal firms behind this is Milberg PLLC, https://en.wikipedia.org/wiki/Milberg https://en.wikipedia.org/wiki/Milberg, who has been charged with illegally paying plaintiffs to sue in order to enrich themselves.
- rainsford 6mo ago
  I don't even really understand why that plan would be "enraging" or really even counter to what customers expect from Costco. Assuming you continue to buy from Costco, and most Costco customers are regular buyers, you'll effectively get the money back in future lower prices and end up paying the same total amount on Costco purchases as if they had sent you a refund check. I can see the appeal of an immediate refund check, but using the tariff refund to lower future prices for customers in a way that drives continued sales seems like both responsible thing to do from a fiduciary perspective and a not unreasonable compromise for the customer. Many companies would, and will, simply pocket the refund.
  - jagged-chisel 6mo ago
    Especially given the complexity of how prices actually increased. Did priced change solely due to tariffs? No, there were other factors. This whole this is just lawyering at its core. I find the outrage “on behalf of customers” to be disingenuous.
- joebo 6mo ago
  As a long-time Costco member and very minor shareholder (like 10 shares), lawsuits like this are frustrating. It is in my best interest as both member and shareholder for Costco to relentlessly look for opportunities to reduce costs, including getting credits back from procurement and sourcing. It would be costly to try and determine the tariff impact to every member and then pass it back along. I'd rather see those funds contribute to keeping prices low by offsetting other cost pressures.
- Majromax 6mo ago
  > this is a wild fantasy when dealing with any commercial entity with a fiduciary responsibility to shareholders. "Fiduciary duty" is less strict than you'd expect. Courts generally recognize a "business judgment rule," where executives are offered broad discretion in strategy subject to some basic reasonability tests. This would allow Costco to say "in order to cultivate goodwill and maintain our reputation, after we receive refunds we will distribute them to our customers based on purchased goods with refunded tariffs." It would also allow the directors to book the refund as profits, or use it for later incentives or marketing, or a variety of other actions. The 'fiduciary duty' aspect here is mostly a myth. Directors do indeed have a fiduciary duty, but that duty is towards the corporation as a whole – including its long-term interests – rather than strictly towards short-term profit maximization. The fiduciary duty doctrine exists more to prevent graft and self-dealing, where managers and directors 'loot' the company by smuggling out profits in ways that benefit themselves personally rather than the company as a whole.
maxerickson 6mo ago
For this situation, Costco is in the unfortunate position of knowing what was purchased under each membership. Still, seems kind of hard to argue that retail sales are not an offer and direct acceptance of that offer.
- stingraycharles 6mo ago
  It’s also not hard to argue that people accepted it because they assumed the additional money went to the government.
  - PlasmaPower 6mo ago
    It's not like Costco told them that. Buying something because a third party misinformed you (or in this case, was only temporarily right) doesn't invalidate the transaction.
    - lsaferite 6mo ago
      You think a seller has some price obligation to you? If they set a price and you pay the price, what they paid for the good is irrelevant unless you had some cost-plus contract that they violated.
    - deleted 6mo ago
      [deleted]
  - lsaferite 6mo ago
    If they had listed a line item for tariff fees then I could see the argument and would say that any refunds should go to customers. By not listing a tariff line item, Costco absorbed the additional costs and likely increased prices. In that scenario they, Costco, are the ones that should be entitled to a refund. This is the same if you walk the chain backwards. Suppliers to Costco that simply raised prices and internally absorbed the tariffs are the ones due a refund, not Costco. Suppliers that sent Costco and invoice with a tariff line item should be on the hook to refund Costco (which means they should be seeking a refund from the US)
glimshe 6mo ago
Whenever you see companies engaging in political positions, know one thing: it's not you they have in mind.
- TheTaytay 6mo ago
  Are you making reference to the “class action farms” or to Costco here. Because I certainly don’t think class action lawsuits have victims in mind. Source: recipient of a few coupons and $10.00 checks after some “successful” class action.
  - weird-eye-issue 6mo ago
    Lawyers get like 50% of the class action settlements its pretty wild.
    - TheTaytay 6mo ago
      Right! THAT is the “business” with a political position in this case. Not the one seeking a refund on illegal taxes. It doesn’t have to be in my personal best interest for me to think it makes sense for a retailer to seek a tariff refund!
    - skeeter2020 6mo ago
      This would be pretty rare. There's no doubt they get a lot in billable hours, and the pay-out process - if complex - can be expensive, but my understanding is it's typically closer to 20% to the lawyers and maybe 5-8% more in administration. It's definitely a lot but not averaging 50%.
- jfengel 6mo ago
  I prefer to deal with a company who is making the world a better place rather than a worse one. I don't care whether they like me or not. I'd rather they did it for good reasons. It makes it more likely that they'll continue to. But they might also do it just to help keep my business, and that suffices.
- swed420 6mo ago
cmiles8 6mo ago
Costco is a rare example of a large company that’s actually pretty well respected for not doing shady things. I doubt customers have much standing here. They were free to not buy items if they didn’t like the price. And I do believe Costco will use this to lower prices vs just pocketing the money.
- Hendrikto 6mo ago
  > They were free to not buy items if they didn’t like the price. Customers (had to) accept prices under the assumption that the money went to the government, who are supposed to use it for the public good. You can easily argue that they would not have accepted the same price, knowing that it would benefit a for-profit corporation.
  - louisbourgault 6mo ago
    Yes, once I would have agreed. But lately, I'd prefer my money to be going to Costco by far over the us government, and I imagine quite a lot of Costco's members (they are known for being Democrat donors, and a well liked company) feel the same. Massive caveat that I'm not American, it just seems like public sentiment doesn't broadly think that all the money going to the US government is used for "public good "
    - matt-attack 6mo ago
      Then why do they continue to lobby for higher taxes, etc. You cannot do that if you simultaneously feel the government is the not the best custodian of those marginal dollars.
  - lsaferite 6mo ago
    Did your receipt say anything about a government tariff? The government was busy telling the hoi polloi that foreign companies were paying the tariff. They fought US companies that wanted to list the tariffs on receipts. They were actively suppressing clarity on the matter to end buyers. Your claim that customers assumed the higher prices was going to the government is specious or simply misinformed.
mytailorisrich 6mo ago
This has obviously no merit as clearly Costco didn't "make customers pay" the tariffs. Customers freely accepted an offer to purchase as normally happens whenever someone visits a shop. Either you accept the offer or you don't but how the price is set is irrelevant. I think that this is a standard play to seek a settlement to make the pain in the backside disappear.
- throw913 6mo ago
  > Customers freely accepted an offer to purchase as normally happens whenever someone visits a shop. Hear me out on an alternative POV: the government engaged in lawless economic coercion, and the coercion trickled down. If you don't like it, sure, you can always go get coerced somewhere else, it's your free choice. I don't see why anyone would object to that, assuming of course they are a corporation or a government
TheTaytay 6mo ago
This article and these lawsuits both seem like manufactured outrage designed to either enrich a few lawyers or blame and distract from another more fundamental injustice, which is the tariffs themselves. Almost everyone on this forum buys retail products, and every American’s purchases were affected by tariffs. This article claims the victims feel “rage” about this. Have you ever felt rage for prices going up due to goods becoming more expensive? I could believe that. If so, was that rage aimed at the retailer who was forced to pay more for the imported goods, or to the person who imposed them? Weird, but okay. If so, assuming the retailers were the target of your “rage”, did you become further enraged when you learned that the unconstitutional tariffs collected were being sought to be refunded by the people who were forced to pay them? What political Venn diagram are we in now? And lastly, do you shop at Costco or were marketed to by Costco? If so, you would be the single person in the world that might be able to claim you are the enraged victim here. It doesn’t make sense. I’ve talked to plenty of people who are mad about tariffs, or mad at capitalism, and certainly mad at Trump. But it’s rare to find a Costco member that thinks Costco is treating them unfairly. They’re kinda famous for the opposite in a sea of exploitive retailers. (They are “famous” for never doing loss-leader shenanigans or charging more than limited markups of 11-14% on any product.) Hell, Costco is the only retailer that wouldn’t surprise me if they turned around and gave ME a tariff refund if they are successful. To literally sue a company for seeking refunds to levied taxes that were declared illegal, appears to be some combination of victim blaming, political distraction, or more likely: convenient enrichment for class action mills.
- kelnos 6mo ago
  I'm pretty enraged that the government was illegally taxing me, and now that those taxes have actually been found to be illegal, I'm not getting a refund. Corporations claiming the refund on my behalf (and then not propagating that refund to me) is just icing on that shit-cake.
  - fzeroracer 6mo ago
    It's this and I don't know how people here can't see it. You're getting fleeced by corporations as they walk away with all of the money thanks to an illegal tax by the US government on most consumer goods. Companies get to benefit from higher prices being standardized (once a price baseline go up, they rarely go back down) and they get another check from Uncle Sam.
jareklupinski 6mo ago
wouldnt the average refund come out to basically a free year of membership? the easiest thing for them to do might be just check who was a member during the tariffs, and credit their membership fee for the 'tier' they were buying people using costco as basically a small-business depot would be lifetime non-transferable free members, and typical family/consumer gets some extra years, which they'll turn around and spend in the store anyway win/win? costco members are sticky, and refunding cash is hard
rubyfan 6mo ago
One could imagine a scenario where this is a political action group response to defying the administration. I have no evidence to support that, just could imagine it because the potential individual return to customers is minuscule.
bfung 6mo ago
As a Costco member and customer, I’d actually trust the leadership more than most companies. Use the tariff money and keep that $1.50 hotdog ~ enough avg Americans can use that break for lunch, even if not the healthiest.
Lerc 6mo ago
This seems premature. This requires an assumption of actions that might be performed if a condition in the future is met. That is not a solid basis for a lawsuit.
lokinorkle 6mo ago
[flagged]
koolba 6mo ago
If Costco had miscalculated its tariffs and was on the hook for some additional tax, they wouldn’t be passing it on retroactively. So it is not reasonable to expect any kind of refund either.
bell-cot 6mo ago
IANAL, nor political expert - but should Costco have just said "this is an unprecedented situation, the US Gov't is still figuring out how it'll work, and there's a lot of uncertainty - so we'll make our decisions after we actually get the check"?
zugi 6mo ago
> That plan enraged customers There is nothing wrong with a taxpayer who paid taxes later ruled illegal filing a request for a refund. This lawsuit is likely a shakedown opportunity for lawyers to enrich themselves. How Costco allocates the money they get back is up to them.
expedition32 6mo ago
Wait I thought foreign countries paid those tariffs!
arjie 6mo ago
Haha, pretty clever. I have to say it is quite impressive how people in law find ways to be the beneficiary of interactions between others. Well played.

94 points by AdmiralAsshat 7mo ago

> Instead of reimbursing the customers who paid more for goods, Costco said on a March 2026 earnings call that it plans to use tariff refunds to lower future prices. > That plan enraged customers who joined Costco based on the proposition that Costco would operate on the slimmest possible margins to ensure they never pay more for goods than Costco can afford to sell them. I feel like Costco is generally a pretty good company, but this is a wild fantasy when dealing with any commercial entity with a fiduciary responsibility to shareholders.

redserk 6mo ago
Fiduciary duty is fun to define because I’d bet it could be argued both ways here. If you want to consider Costco’s low margins as a core factor as to why consumers choose them, opting for a decision that makes their customer base run off wouldn’t be very responsible to shareholders. Consider the Target backlash last year. They’re since down 14% vs Walmart (up 30-ish%). Regardless of anyone’s political beliefs, I don’t think a 14% loss seemingly caused by behavior that a segment of customers considered hostile is thinking of the shareholders.
- petcat 6mo ago
  Right but they're not being sued by their shareholders, they're being sued by a handful of customers and "on Behalf of All Others Similarly Situated".
  - JumpCrisscross 6mo ago
    > they're being sued by a handful of customers To be fair, they’re being sued by customers who were marketed memberships.
    - zugi 6mo ago
      To be really fair, they're being sued by lawyers hoping to take 50% of the proceeds, or 50% of some settlement that they get by shaking down Costco via threats to its reputation.
      - JumpCrisscross 6mo ago
        > To be really fair, they're being sued by lawyers Is that the case history? Or bullshit assumption? Because this looks plaintiff sponsored.
        zugi 6mo ago
        Adding "bullshit" to a sentence does nothing to hide this kind of ambulence-chasing vulturism and exploitation - in fact it rather highlights it. I mean, one of the legal firms behind this is Milberg PLLC, https://en.wikipedia.org/wiki/Milberg https://en.wikipedia.org/wiki/Milberg, who has been charged with illegally paying plaintiffs to sue in order to enrich themselves.
rainsford 6mo ago
I don't even really understand why that plan would be "enraging" or really even counter to what customers expect from Costco. Assuming you continue to buy from Costco, and most Costco customers are regular buyers, you'll effectively get the money back in future lower prices and end up paying the same total amount on Costco purchases as if they had sent you a refund check. I can see the appeal of an immediate refund check, but using the tariff refund to lower future prices for customers in a way that drives continued sales seems like both responsible thing to do from a fiduciary perspective and a not unreasonable compromise for the customer. Many companies would, and will, simply pocket the refund.
- jagged-chisel 6mo ago
  Especially given the complexity of how prices actually increased. Did priced change solely due to tariffs? No, there were other factors. This whole this is just lawyering at its core. I find the outrage “on behalf of customers” to be disingenuous.
joebo 6mo ago
As a long-time Costco member and very minor shareholder (like 10 shares), lawsuits like this are frustrating. It is in my best interest as both member and shareholder for Costco to relentlessly look for opportunities to reduce costs, including getting credits back from procurement and sourcing. It would be costly to try and determine the tariff impact to every member and then pass it back along. I'd rather see those funds contribute to keeping prices low by offsetting other cost pressures.
Majromax 6mo ago
> this is a wild fantasy when dealing with any commercial entity with a fiduciary responsibility to shareholders. "Fiduciary duty" is less strict than you'd expect. Courts generally recognize a "business judgment rule," where executives are offered broad discretion in strategy subject to some basic reasonability tests. This would allow Costco to say "in order to cultivate goodwill and maintain our reputation, after we receive refunds we will distribute them to our customers based on purchased goods with refunded tariffs." It would also allow the directors to book the refund as profits, or use it for later incentives or marketing, or a variety of other actions. The 'fiduciary duty' aspect here is mostly a myth. Directors do indeed have a fiduciary duty, but that duty is towards the corporation as a whole – including its long-term interests – rather than strictly towards short-term profit maximization. The fiduciary duty doctrine exists more to prevent graft and self-dealing, where managers and directors 'loot' the company by smuggling out profits in ways that benefit themselves personally rather than the company as a whole.

maxerickson 6mo ago

For this situation, Costco is in the unfortunate position of knowing what was purchased under each membership. Still, seems kind of hard to argue that retail sales are not an offer and direct acceptance of that offer.

stingraycharles 6mo ago
It’s also not hard to argue that people accepted it because they assumed the additional money went to the government.
- PlasmaPower 6mo ago
  It's not like Costco told them that. Buying something because a third party misinformed you (or in this case, was only temporarily right) doesn't invalidate the transaction.
  - lsaferite 6mo ago
    You think a seller has some price obligation to you? If they set a price and you pay the price, what they paid for the good is irrelevant unless you had some cost-plus contract that they violated.
  - deleted 6mo ago
    [deleted]
- lsaferite 6mo ago
  If they had listed a line item for tariff fees then I could see the argument and would say that any refunds should go to customers. By not listing a tariff line item, Costco absorbed the additional costs and likely increased prices. In that scenario they, Costco, are the ones that should be entitled to a refund. This is the same if you walk the chain backwards. Suppliers to Costco that simply raised prices and internally absorbed the tariffs are the ones due a refund, not Costco. Suppliers that sent Costco and invoice with a tariff line item should be on the hook to refund Costco (which means they should be seeking a refund from the US)

glimshe 6mo ago

Whenever you see companies engaging in political positions, know one thing: it's not you they have in mind.

TheTaytay 6mo ago
Are you making reference to the “class action farms” or to Costco here. Because I certainly don’t think class action lawsuits have victims in mind. Source: recipient of a few coupons and $10.00 checks after some “successful” class action.
- weird-eye-issue 6mo ago
  Lawyers get like 50% of the class action settlements its pretty wild.
  - TheTaytay 6mo ago
    Right! THAT is the “business” with a political position in this case. Not the one seeking a refund on illegal taxes. It doesn’t have to be in my personal best interest for me to think it makes sense for a retailer to seek a tariff refund!
  - skeeter2020 6mo ago
    This would be pretty rare. There's no doubt they get a lot in billable hours, and the pay-out process - if complex - can be expensive, but my understanding is it's typically closer to 20% to the lawyers and maybe 5-8% more in administration. It's definitely a lot but not averaging 50%.
jfengel 6mo ago
I prefer to deal with a company who is making the world a better place rather than a worse one. I don't care whether they like me or not. I'd rather they did it for good reasons. It makes it more likely that they'll continue to. But they might also do it just to help keep my business, and that suffices.
swed420 6mo ago

cmiles8 6mo ago

Costco is a rare example of a large company that’s actually pretty well respected for not doing shady things. I doubt customers have much standing here. They were free to not buy items if they didn’t like the price. And I do believe Costco will use this to lower prices vs just pocketing the money.

Hendrikto 6mo ago
> They were free to not buy items if they didn’t like the price. Customers (had to) accept prices under the assumption that the money went to the government, who are supposed to use it for the public good. You can easily argue that they would not have accepted the same price, knowing that it would benefit a for-profit corporation.
- louisbourgault 6mo ago
  Yes, once I would have agreed. But lately, I'd prefer my money to be going to Costco by far over the us government, and I imagine quite a lot of Costco's members (they are known for being Democrat donors, and a well liked company) feel the same. Massive caveat that I'm not American, it just seems like public sentiment doesn't broadly think that all the money going to the US government is used for "public good "
  - matt-attack 6mo ago
    Then why do they continue to lobby for higher taxes, etc. You cannot do that if you simultaneously feel the government is the not the best custodian of those marginal dollars.
- lsaferite 6mo ago
  Did your receipt say anything about a government tariff? The government was busy telling the hoi polloi that foreign companies were paying the tariff. They fought US companies that wanted to list the tariffs on receipts. They were actively suppressing clarity on the matter to end buyers. Your claim that customers assumed the higher prices was going to the government is specious or simply misinformed.

mytailorisrich 6mo ago

This has obviously no merit as clearly Costco didn't "make customers pay" the tariffs. Customers freely accepted an offer to purchase as normally happens whenever someone visits a shop. Either you accept the offer or you don't but how the price is set is irrelevant. I think that this is a standard play to seek a settlement to make the pain in the backside disappear.

throw913 6mo ago
> Customers freely accepted an offer to purchase as normally happens whenever someone visits a shop. Hear me out on an alternative POV: the government engaged in lawless economic coercion, and the coercion trickled down. If you don't like it, sure, you can always go get coerced somewhere else, it's your free choice. I don't see why anyone would object to that, assuming of course they are a corporation or a government

TheTaytay 6mo ago

This article and these lawsuits both seem like manufactured outrage designed to either enrich a few lawyers or blame and distract from another more fundamental injustice, which is the tariffs themselves. Almost everyone on this forum buys retail products, and every American’s purchases were affected by tariffs. This article claims the victims feel “rage” about this. Have you ever felt rage for prices going up due to goods becoming more expensive? I could believe that. If so, was that rage aimed at the retailer who was forced to pay more for the imported goods, or to the person who imposed them? Weird, but okay. If so, assuming the retailers were the target of your “rage”, did you become further enraged when you learned that the unconstitutional tariffs collected were being sought to be refunded by the people who were forced to pay them? What political Venn diagram are we in now? And lastly, do you shop at Costco or were marketed to by Costco? If so, you would be the single person in the world that might be able to claim you are the enraged victim here. It doesn’t make sense. I’ve talked to plenty of people who are mad about tariffs, or mad at capitalism, and certainly mad at Trump. But it’s rare to find a Costco member that thinks Costco is treating them unfairly. They’re kinda famous for the opposite in a sea of exploitive retailers. (They are “famous” for never doing loss-leader shenanigans or charging more than limited markups of 11-14% on any product.) Hell, Costco is the only retailer that wouldn’t surprise me if they turned around and gave ME a tariff refund if they are successful. To literally sue a company for seeking refunds to levied taxes that were declared illegal, appears to be some combination of victim blaming, political distraction, or more likely: convenient enrichment for class action mills.

kelnos 6mo ago
I'm pretty enraged that the government was illegally taxing me, and now that those taxes have actually been found to be illegal, I'm not getting a refund. Corporations claiming the refund on my behalf (and then not propagating that refund to me) is just icing on that shit-cake.
- fzeroracer 6mo ago
  It's this and I don't know how people here can't see it. You're getting fleeced by corporations as they walk away with all of the money thanks to an illegal tax by the US government on most consumer goods. Companies get to benefit from higher prices being standardized (once a price baseline go up, they rarely go back down) and they get another check from Uncle Sam.

jareklupinski 6mo ago

wouldnt the average refund come out to basically a free year of membership? the easiest thing for them to do might be just check who was a member during the tariffs, and credit their membership fee for the 'tier' they were buying people using costco as basically a small-business depot would be lifetime non-transferable free members, and typical family/consumer gets some extra years, which they'll turn around and spend in the store anyway win/win? costco members are sticky, and refunding cash is hard

rubyfan 6mo ago

One could imagine a scenario where this is a political action group response to defying the administration. I have no evidence to support that, just could imagine it because the potential individual return to customers is minuscule.

bfung 6mo ago

As a Costco member and customer, I’d actually trust the leadership more than most companies. Use the tariff money and keep that $1.50 hotdog ~ enough avg Americans can use that break for lunch, even if not the healthiest.

Lerc 6mo ago

This seems premature. This requires an assumption of actions that might be performed if a condition in the future is met. That is not a solid basis for a lawsuit.

lokinorkle 6mo ago

[flagged]

koolba 6mo ago

If Costco had miscalculated its tariffs and was on the hook for some additional tax, they wouldn’t be passing it on retroactively. So it is not reasonable to expect any kind of refund either.

bell-cot 6mo ago

IANAL, nor political expert - but should Costco have just said "this is an unprecedented situation, the US Gov't is still figuring out how it'll work, and there's a lot of uncertainty - so we'll make our decisions after we actually get the check"?

zugi 6mo ago

> That plan enraged customers There is nothing wrong with a taxpayer who paid taxes later ruled illegal filing a request for a refund. This lawsuit is likely a shakedown opportunity for lawyers to enrich themselves. How Costco allocates the money they get back is up to them.

expedition32 6mo ago

Wait I thought foreign countries paid those tariffs!

arjie 6mo ago

Haha, pretty clever. I have to say it is quite impressive how people in law find ways to be the beneficiary of interactions between others. Well played.