A new lawsuit accuses Costco Wholesale of misleading online shoppers by implying it offers free shipping while quietly inflating product prices to cover delivery costs.
The complaint, filed Tuesday in U.S. District Court in Seattle, alleges that the Issaquah, Wash.-based company displays “$0.00” for shipping during online checkout, leading customers to believe delivery is free when the cost is actually embedded in the product price.
Costco acknowledges on its support pages that online prices may include shipping and handling, sometimes leading to higher prices online than in the company’s warehouse stores. However, the lawsuit argues those disclosures are buried in FAQ sections, not presented during checkout or on product pages.
The suit was filed by Christina Zaimi, a Costco member from California, who says she believed shipping was free when she bought furniture through Costco.com. The suit says Zaimi paid $2,349.99 (before rebate) for a couch online that was available for $2,099.99 in-store — a $250 markup that the suit says was used to cover shipping.
“In reality, Costco makes consumers pay for ‘free’ shipping by hiding the cost of shipping in the cost of certain Products,” the lawsuit alleges.
It may seem like an unusual situation for a company known for low prices on everything from 85-inch TVs to its famous $1.50 hot dog combo.
But Costco has faced similar complaints before. In a lawsuit in January in King County Superior Court in Seattle, plaintiff Annie Song of Connecticut alleged that Costco deceived her by advertising free delivery while secretly charging higher prices online than in-store, including toilet paper that cost $3.50 more online.
In its motion to dismiss that case, Costco said it clearly discloses on its support pages that online prices may include shipping and handling. Costco argued that it does not separately charge for shipping on many items and that the “$0.00” at checkout reflects the absence of an added fee beyond the online price.
Customers discuss the practice in online forums, noting the company’s use of the phrase, “May be available In-Warehouse at a lower non-delivered price.”
Plaintiffs in both cases argue that those disclosures are not sufficient.
In the latest lawsuit, Zaimi is seeking to represent a nationwide class of Costco shoppers who bought products online that were advertised with free or “$0.00” shipping. The suit alleges violations of consumer protection laws, breach of contract, and unjust enrichment through deceptive pricing, among other claims.
GeekWire contacted Costco this morning for comment on the latest complaint, and we will update this story with any response from the company.
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