Costco accused of failing to disclose online markups

Costco allegedly failed to disclose price markups on products sold on its website and mobile app despite its promise to do so, according to a recent lawsuit seeking a class-action status.

The Issaquah-based wholesale retailer sells some products on its website and app at higher prices than in warehouses due to shipping and handling costs. On its website, Costco says when an item is more expensive online, customers will see the message: “Item may be available in your local warehouse for a lower, non-delivered price.”

The lawsuit, filed this month in the U.S. District Court for the Western District of Washington by Connecticut resident Annie Song, alleges Costco routinely failed to include the disclosure when customers made purchases online.

Song said in the lawsuit she purchased a 30-roll of Charmin Ultra Soft Bath Tissue for $33.49 online in January, while in the in-store price was $29.99. If she had known about the markup, she said, she would have purchased the product from the warehouse instead. According to the plaintiff, at no point during online shopping did she receive a disclosure about the product being available in-warehouse for a lower price.

Costco “committed unfair and deceptive practices by promising that it would include a clear disclosure on its website or mobile app whenever an online item was more expensive than that same item sold in-store at Costco,” said the court document. “Then omitting that disclosure on online items before a consumer makes a purchase on Costco.com.”

Costco didn’t respond to a request for comment. Song’s attorney declined to comment due to ongoing litigation.

Additionally, the plaintiff argued the failure to disclose the markup was “unfair and deceptive,” a direct violation of the Washington Consumer Protection Act which prohibits such behavior.

The proposed class action said the aggregate number of damages “exceeds” $5 million. It is seeking monetary damages and injunctive relief.