Costco CEO defends controversial new membership policy arguing it’s ‘faster service’ with extra benefit despite backlash

THE CEO of Costco has defended how the retailer cracks down on shoppers who abuse its membership policy.

Bosses at the popular wholesaler are clamping down on those who share membership cards.

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Costco is trying to tackle the problem by installing scanning machines at several stores.

Rather than showing cards, members must place them under the scanner before stepping foot into the warehouse.

“We’re testing some front door scanners,” CEO Ron Vachris said in a transcript seen by The Motley Fool .

“They’re speeding up our registers significantly when we get all the scanning and memberships verified at the front door.”

The idea to scan members’ IDs at the door was initially suggested to make in-store shopping more efficient and to reduce membership sharing.

Shoppers previously had to show their membership cards to an employee when entering the store.

The scanners could speed this process up and some shoppers have expressed their support for the policy change.

“New membership scanner at the entrance! It is a very quick process,” one wrote on social media .

“I really don’t get the big deal. A machine that scans the membership card isn’t really any different than a person you flash the card to,” another shopper wrote.

“It might be more efficient.”

Others, however, have been less keen on the idea and are adamant that customers should be allowed to share membership cards.

“Poor Costco. How will they ever survive if, god forbid, I let the single mom at work use my card to go buy something?” a customer said.

There are many stories on social media about Costco shoppers who have been turned away from the store due to membership ID issues.

“I had my mom’s Costco card and they gave me such a hard time they literally wouldn’t let me buy anything,” one customer wrote on X .

Some shoppers can’t understand why the store has become so stern about membership rules. They think the strict policies are wasting their time.

“If members take extra family shopping they [Costco] are making more money,” a comment said.

It is not yet clear when these scanning machines will be introduced more widely in Costco stores.

There are a number of Costco stores in Washington, however, that are already using them.

The scanners were brought into these stores in January 2024.

Costco’s CFO Richard Galanti said that although only a small per cent of members share their ID, “when you’re dealing with millions of transactions, even a small percentage is something you want to correct.”

While some customers are angry about Costco’s crackdown on membership sharing, there is an added benefit to the chain’s new policy that some may like.

Introducing scanners at Costco store entrances will supposedly create much-needed space in the packed car parks.

Parking spaces will be turned over much more quickly, according to Vachris.

Shoppers have often complained about the chaotic parking lots at Costco, so this update may come as good news to them.

Costco membership sharing guidelines

Costco has strict rules for membership use that shoppers must follow and they've been cracking down on offenders in recent years.

• Primary Member Use : Only the primary cardholder can use this Costco membership card. Sharing it for purchases is not allowed as the photo on the card must match the person using it.
• Household Card : Each primary member can add one free household cardholder who lives at the same address. This person will receive their own membership card and can shop at Costco independently.
• Guest Policy : Members can bring up to two guests per visit to Costco. However, only the member can make purchases. Guests must be accompanied by the member.
• Authorized Cardholder : For an additional fee, you can add an authorized cardholder, such as a family member or friend, who doesn’t reside at your address. They will receive their own card and can shop independently.

Credit: Costco

MEMBERSHIP CHANGES

This membership scanner policy is not the only change Costco has announced this year.

The chain announced it will raise its membership prices for the first time in seven years on July 10.

The price increase will come into force on September 1, affecting 52 million members across the US and Canada .

The regular membership fee will rise from $60 to $65 and the Executive Membership will from $120 to $130.

Members were not pleased about the news and took to social media to express their frustration.

“If enough people cancelled, I’m sure they’d rethink their move lol,” one said .

Another customer called the price increase a “rip off.”

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