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> 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 pr

by petcat 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 7mo 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 7mo 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 7mo ago
    > they're being sued by a handful of customers To be fair, they’re being sued by customers who were marketed memberships.
    - zugi 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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.

by petcat 7mo ago

redserk 7mo 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 7mo 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 7mo ago
  > they're being sued by a handful of customers To be fair, they’re being sued by customers who were marketed memberships.
  - zugi 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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 7mo 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.