Costco aims to thwart non-member card users at self-checkout

Costco Wholesale confirmed that it has begun checking photo membership cards at self-checkout stations to crack down on non-members making purchases using improperly shared cards.

In recent days, a stream of media reports said Costco has increasingly asked customers at the self-checkout area to show a member card with a photo in order to thwart unauthorized use of its cards by non-members. The Issaquah, Washington-based warehouse club chain told Winsight Grocery Business in an email on Wednesday that requiring a membership card at checkout is nothing new, but the rollout of more self-checkout kiosks has drawn more non-member customers.

Under Costco’s membership policy, cards are not transferable. Two people can be on the basic Gold Star Membership ($60 annually) and the higher-tier Executive Membership ($120 annually), including one primary member and one free household member. Business Memberships ($60 annually) require another $60 fee for each additional user beyond the primary member.

“Costco is able to keep our prices as low as possible because our membership fees help offset our operational expenses, making our membership fee and structure important to us. Costco’s membership policy has not changed,” Costco said in an emailed statement.

Though photo checks of member IDs haven’t been incorporated into membership policy, Costco apparently has changed enforcement to make sure the photo on the card matches the person at the self-checkout kiosk. Published reports said the additional photo verification has popped up in stores across the country.

“We have always asked for membership cards at our registers at time of checkout. Our membership policy states that our membership cards are not transferable, and since expanding our self-service checkout, we’ve noticed that non-member shoppers have been using membership cards that do not belong to them,” Costco explained in the email to WGB. “We don’t feel it’s right that non-members receive the same benefits and pricing as our members.

“As we already ask for the membership card at checkout, we are now asking to see their membership card with their photo at our self-service checkout registers,” the club retailer said. “If their membership card does not have a photo, then we ask for a photo ID.”

A Sam’s Club spokesman told WGB via phone that the Walmart wholesale club subsidiary hasn’t encountered such issues with unauthorized card use at self-checkouts and has no policies regarding member ID photo verification. BJ’s Wholesale Club couldn’t immediately be reached for comment on Wednesday.

For the 12 months through the fiscal 2023 third quarter, Costco reported membership fee revenue of $4.4 billion, with its member base encompassing 69.1 million households and 124.7 million cardholders. The renewal rate in the United States and Canada stood at 92.6% over that period.

Chief Financial Officer Richard Galanti has previously told analysts that Costco was mulling an increase in its membership fee. In reporting fiscal 2023 second-quarter results, he noted in a conference call that June would mark the sixth year since Costco last raised its fee. “What we said over the last few quarters is that, in our view, it’s a question of when—not if—and so we’ll let you know,” he said in the call. (Call transcript provided by AlphaSense.)

Overall, Costco operates 853 clubs, including 587 in the U.S. and Puerto Rico and 107 in Canada.