Return Policy Ethics

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My last post on Costco’s extremely generous return policy garnered some comments that opened my eyes a little to the return policy “tactics” some may use to get a little more for their money. I’m curious as to what most of you believe is ethical and what is not ethical when dealing with returns.

{ 50 comments, please add your thoughts now! }

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50 Responses to “Return Policy Ethics”

  1. Hazzard says:

    I gotta chime in here. I’ve got to be high on the Costco “loyalty” list. I love the place for lots of reasons. A couple of them are:

    -They pay “living wages” to their employees
    -Their employees are friendly and of higher quality than other stores
    -The value for your money is outstanding
    -The return policy gives me peace of mind in case I have a problem with something

    I think that there are lots of people out there that return things FAR too often. Is it unethical? Hmmm. I have a little trouble calling it that, although it’s darn close. If the company allows returns without question, then I think it is ethical. I believe Costco should consider tightening up their policies for returns. I think they are too liberal with it. When you are allowing customers to return products YEARS later, it just doesn’t sit well with me.


  2. Caitlin says:

    All that, AND they offer their employees decent health care.

    So I’m like Hazzard…a very very loyal customer. I want to support their business so I would probably have more firm “ethics” when deciding whether to return something. I would not try to exploit their policy simply for my own gain. Not that I’d do that anyway…and mostly I try to stick with companies I don’t hate anyway…

    but in a way it’s like insurance fraud in the long run…we all pay for customer-serving policies that have been exploited

  3. Mel says:

    I wish we had a Costco…

    I wondered, did you ever get your rewards on the Sony visa or Schwab cards?

  4. jim says:

    I never signed up for the Sony Visa because I already had it and I only charged the Schwab about two weeks ago, but no rewards yet.

  5. John says:

    I have a hard time thinking that costco would take back an item 4 years old. If that’s the case I doubt their return policy will remain that way once people realize it’s that way. While most Americans probably would not take adavantage of Costco’s return policy, it’s just takes a small percentage to use it and have it taken away. Look at the new bankruptcy laws. Laws that remain unchanged for many years so that debt heavy Americans can’t have a fresh start in life is changed because a small percentage of us used it, probably because we learned how easy it is for us to not pay for things when we don’t have to. Instead of paying for what we promise to, we tell others who dealt with us in good faith to screw themselves because we’re not paying them what we owe them. Legal? Of course it is. Ethical? I don’t think so.

  6. John says:

    Any way to edit a word in the last post?

  7. jim says:

    Just leave a comment on what you want changed and I’ll make the modification, I don’t think you can do it yourself.

    I think I was just being stubborn before and I was also focusing on the wrong point (though mostly I was stubborn), the fact that a TV would fail within four years, instead of the real point, that people will try to take advantage of the system. I think had we discussed bankruptcy laws instead, I would’ve entirely agreed with you.

  8. Tool Man says:

    How does Costco word their return policy? If it is worded to say that they will accept returns any any future date (with or without receipt, with the same membership, yadda-yadda-yadda, etc.) then I fail to see why everyone is chastising Jim for being unethical. If you are doing nothing illegal I find it very hard for the unethical title to stick. They should reword the policy, the issue is with Costco not the consumer who is utilizing the policy.

    I will call it exploitation of the policy…a “stretching” of the intended meaning of the policy. The answer is simple, have Costco change the policy…can I use the word “policy” a couple more times??!

  9. jim says:

    I don’t think anyone called me personally unethical, I didn’t do anything, it was a response to the fact that I defended (a fictitious) someone who returned a product (expensive TV) that broke in what I believe to be an unreasonably short amount of time (4 years). I returned pants I never wore because they were too long (no dressing rooms at Costco!).

    In further discussion though, I think returning a 4 year old $4000 TV is suspect… they should try to get the television repaired instead. Initially though, the purchaser should’ve done their due diligence and purchased a better TV in the first place.

  10. At they list the following policy (which is pretty close to the in-store policy from what I remember):

    Returns or Exchanges
    Costco guarantees your satisfaction with the merchandise you purchase from us. products may be returned to any of our hundreds of Costco warehouses worldwide. Or, if you wish to return or exchange merchandise directly to, contact us at customer service.

    Effective November 4th, 2002, Costco Wholesale’s desktop and notebook computer return policy is six-months from the date of purchase. After six-months from the date of purchase, all service and technical support will be subject to the applicable remaining manufacturers’ warranty.

  11. John says:

    Jim, I think the problem is your use of ethics that people are having trouble with. The topic of your post was something about Costco’s return policy. Your said it was a great policy, in fact incredible. You told people to use it as a free extended warranty. Then you gave an example of returning a TV to them if it fail after 4 years.

    It’s not a free extended warranty. That’s the issue. I don’t thinkyou feel so any more. To make your post more clear you should explicitly state so. Others seem to be trying to defend your initial point and it may be loss to many that you have change your position since then.

  12. Betty says:

    I know several people who work for returns departments at various Costcos on the west coast. Yes, they will take back a four year old tv. They will also take back used underwear that “wore out after only 1 year of use” and half-eaten cakes because “it was just too large for everyone to eat.” They will no longer accept computers and laptops after 6 months because of the increasing number of customers who traded up every year.

    Currently, Costco employes are logging in thousands of pools… all purchased at the beginning of summer. It is a well known fact within the company that the Monday after the Superbowl extra help is needed for all the returned large screen TVs. Costco management is well aware of the abuses of their liberal return policy, but see it as a business cost in exchange for the near fanatical loyalty customers and employees show towards the company. Except for the loss on computers, it seems well worth it.

    • echidnina says:

      Wow! Great comment for an inside view on Costco’s returns department… It seems like the company and its employees are well aware of the various uses of its return policy, so if Costco is coming out on top despite these uses and abuses, more power to them.

  13. question says:

    Is it fraud or an ethics issue if someone procures a sweater at one Costco for $5 and returns it at another Costco for $10, making a $5 profit since there are times when not all of the Costcos have syncronized their pricing due to some price drop or other reasons.

    If that is a fraud what sorta penalties are associated from it.

    And would this be the same if a Costco employee states that it’s ok to do that (but might be considered a little shady)?

  14. Joe says:

    I have found at costco that if you do not have a receipt and it was a recent purchase they have record in their computer how much you paid for the item and will only receive that amount. If the purchase was over 6 months or a year ( i don’t recall which) they may no longer have record of it and will give you the price it currently sells at. Given this I think it would be fairly difficult to take advantage of pricing differences since prices tend to go down over time and not up.

  15. tim says:

    Sams club has a simular policy. However, I undoubtably believe that Costco has a better return policy. They may be worded the same but I cannot find any evidence of someone returning something to Sams club years later. A return I’ve done at sams club was:

    A dolly, I used it to move appliances to the garage. Returned after use, and it looked used.

    Did they ask any questions? Yes they did. What was wrong with it?

    I then went to the store the next week. I was looking at business portfolios. A lady told me to buy both (lady that worked there) and return which one I didn’t want.

    So I returned the one I didn’t want. I asked the lady, last week I returned an item, this week I’m returning this because a sales lady told me to. Am I going to be labeled a chronic returner? She said don’t worry about it, people return stuff all the time and it doesn’t matter. Maybe some other fluffy words but all leading to YES RETURN WHENEVER YOU WANT, RETURN EVERYTHING.

    That was at Sam’s club. I’m considering joining Costco for the no questions asked policy, no guilt trip. However, I had a dilema there where I was returning something from my works Costco card. I asked if I could return something on a different card, she said well yes but it’s hard to track if your a chronic returner.

    Who’s better? I’m not sure. For bigger purchases that you expect to last some good time (years) Costco.

    I’m sure they are both the same, but I believe costco is better.

  16. ericlp says:


    I was shopping for a TV. So, I go to my costco… And being a noob. I ask, the dude on the floor next to the TV’s. “If I purchase this TV… How long do I get to bring it back if it doesn’t turn on?” He told me 5-6 years!!! Whoooa… I went to other places like sears/Best buy and for the same tv with a 3 year service agreement it would have cost about 400.00 more then what costco had.

    Needless to say I bought the TV from Costco. The TV is working great and it’s been about 2 years. I guess… In my mind… I wouldn’t feel bad returning this TV in 3 years if it crapped out on me. But I wouldn’t return it 4-6 years later. I don’t think that is reasonable. I dunno, if the employee’s say you can bring it back in 5 – 6 years……. What is the real deal here? Unless I just got bad info?

  17. Hank says:

    I posted this on the other thread and will edit it to match this one:

    I am a manager at Costco and have worked in returns and RTV which is the department in charge of TRYING to get credit on returned items. I say trying because costco does not get credit for every item we sell. A more realistic number is 65% of the products currently in stock and 30% on deleted items. We do not receive credit on most appliances and half of all electronics we carry. All items that we do not get credit on we salvage to companies for 25 cents on the dollar which means when we take back a $2000 plasma we get $500 for it. Seeing as how our profit margin runs at 10% it will take you spending $15,000 to make up for what we lose. Yes we are aware that people abuse our policy and when they have excessive returns we do put a stop to it. But considering most of our warehouses have 40,000-120,000 members the amount of people doing this is very small. Unfortunately as technology progresses along with prices we are losing more and more money. A new tv return policy is in the works aimed at around 2 years. You are correct when you realize that the irresponsible behavior of the few will make it harder for the majority of the good.

    Costco guarantees all of our products to be high quality and feel free to return items that you try and dont like, are the wrong size, spoiled, defective etc. We are here to make sure you are satisfied with the items you purchase but that does not mean you can be unsatisfied with an item that lasts you 5+ years. Here are some general guidelines depending on usage:
    Appliances 3-5 years
    Most consumer electronics including tvs, video games, stereos 2 years
    Computers 6 months
    Clothing 1 year unworn
    Media 6 months unopened, 1 month opened for damaged product (we are not blockbuster)

    Hope I helped some of you out.

    p.s. for the question asked in number 13, look up your local law, you will see that buying an item and returning it for more money is indeed fraud and while one may get away with on a small item a few times, if you try on a larger item you can be prosecuted.

    • Meg says:

      Please tell me whether you consider it ethical to return a mattress that we purchased 10 months ago from Costco. It is a memory foam mattress that had some defects when we first got it. We communicated with the company about a replacement mattress but the defects (e.g.hump in the middle) resolved itself after about 3 months. I have always hated the mattress because it is much too hard. My husband likes it and really has no incentive to help me move the 120 lb. mattress down three flights of stairs. The reason for the delay is that I cannot move it myself. I would like to replace the king size mattress for two twin mattresses from costco. Is this moral/ ethical/ honest? I would rather take the hit than be dishonest.

  18. Nav says:

    I have been reading various comments issued on numerous website about Costco’s return policy. Its no doubt THE best and because of its extreme generous nature, people get this tendency to abuse it. I took Costco’s membership couple of months back and the return policy was surely one of the MAJOR reasons of taking the membership( not that I had any dubious intentions, but just a plain security sense that the purchased product will last for a long time!!). I recently bought an electronic stuff for arnd $400 from Costco and thought lets try it, and if I don’t like it, I will return it. Well, I used it, liked it and planning to get a LCD TV real soon. Bottomline, in almost most of the cases, the return policy is there to make sure that its not a screwed up item. I am very sure Costco had some issues with couple of shady returns, but I seriously think the amount of good publicity they get because of it, completely outweighs its negative effects. Now its like cult thing…and people never abuses when they like it from the bottom of their heart. I am just a recent member, but I know its going to be a long journey!!

  19. Benjiman says:

    I bought the Vizio 37″ LCD over xmas of 05 and am very happy with the price and the TV. But now (3 mos later) the TV has dropped in price by $100. I asked the clerk at Costco if they had some kind of price protection policy. He said to return it and buy it again at the $100 savings, kind of a hassle in my opinion. It would be easier if they just gave me my $100, a friend purchased a piece of exercise equip online at and soon after the purchase he rec’d a credit to his credit card…when he phoned they said there was a price drop and the money credited was the difference in the new price…I guess they only price protect online and maybe only for a certain amount oif time.

    When I had asked my question to the clerk about the TV, there was some Asian kid there telling me he was going to buy an XBOX 360 play it for a while and return it…to me, that way of thinking is completely messed up…and is ABUSE. Who is raising these kids?…THERE IS NO SUCH THING AS A FREE LUNCH…just because there are loopholes doesn’t mean we should slide through them everytime (that’s what makes sleazy lawyers… sleazy). Look at carpool lanes, they were intended for commuter carpools (to encourage carpooling), now any joker with his 5 year old or even pregnant women consider themselves 2 people (ABUSE). As a result the carpool lane is now slower than normal traffic lanes, if people would use things as intended (a carpool van full of employees going to the same workplace) and in moderation the world would work more fluidly and be a better place for all.

    I’m not saying that you can’t return things, just have a legitimate reason, and don’t use it to your advantage or profit. Do it in moderation, or it will surely be ruined for all. A prime example is the Costco computer return policy that had to be implemented to combat ABUSE by complete losers. That’s what EBAY is for people…if you don’t like it…sell it to someone else who will. Just because we have frredom of speech in this country doesn’t mean I can or should say anything I want at anytime, laws had to be put on the books to clarify freedom of speech’s limitations. People with no self control and loophole sliders are the reason for the huge amount of rules (clarifying and limiting simple concepts for idiots and abusers) and more rules make for a unhappy existence for all. We need rules, just simple ones that all will follow and understand instead of trying to find a way around them (so childish) requiring more rules to clarify and limit the rules in place. There will always be loopholes, it is the responsiple adult who chooses to abide by the intention of the policy within reason.

  20. nicolas says:

    Costco isnt’ all THAT ethical. In Puerto Rico the company only honors a 90-day return policy, though the customer service staff on the phone insists that the no-limit policy still applies. I’ve shopped at Costo in PR for years, so I know the policy well. I’ve complained to customer service about the dishonesty, but they just smirk.

    Also, Costco is one of the companies that has municipalities use eminent domain against other property owners so they can get the land to build new clubs. That is the issue that was covered in the hot-button case before the Supreme Court, Kelo vs New London.

    [EDIT: moved the URL into the link]

  21. Deanna says:

    So we just returned a projection TV tonight that we bought in 2002 for $1700. Not only did they give us a full credit, but offered to give us a full REFUND.

    We looked at each other like “What??” and decided to return the TV, because 4 yrs for a $1700 TV is not that long. The TV crapped out on us this past weekend.

    We exchanged it for a Plasma at Costco.

  22. Marcus says:

    I have yet to return something to Costco but intend to return a TV because the bulb blew out on it. It will cost about 300 dollars to replace but I bought it of the floor and when I brought it home it kept turning off after viewing it for longer than a few hours. Now it wont turn on at all. So all in all I intend to use that money toward another T.V. there at Costco. I think they make the most of their return policy in that people will not hesitate to buy those big purchases from them knowing that if they have a problem they can return it without the hassle that other stores give. Not to mention that we pay to shop there. It’s the least they could do for paying members.

  23. Tom says:

    As a long time stock holder and advocate for Costco, I see both sides of the argument here. That being said, when the company first started, this type of return policy was plausible mostly because you had to qualify to become a member! This type of screening kept a large portion of the general public to only dream of being a member and those that were members were typically proud to be such and treated the company and its property almost as though it was it’s own. In general, you had a higher class of shopper. Now you have three ways to qualify…cash, check or Amex and it has brought in a different mix of clientel. Since qualification for membership is no longer mandatory, of course sales have gone up, but so has hidden shrink and overall operating costs. Does profit increase exponentially? I don’t have access to the books to know, but I do know it was a more pleasant shopping experience when membership was a priveledge, not a right.

  24. Greg says:

    One individual who posted said, “If the company allows returns without question, then I think it is ethical.” I beg to differ. What Costco has said all of these years is that they’ll allow you to return items without question because they trust you. NO MORE. They’ve been burned by lack of ethics too many times, and are now saying by their new return policy, “Sorry society, but you have proven that we can’t trust all of you”. Too bad that 10% of our society ruins it for the remainder of us who attempt to live right. Did any of these people who return 2 year old electronics with no good reason ever say to themselves, “is this not stealing?”.

  25. Brian says:

    Interesting thoughts here. However, I have one question. It seems like everyone is drawn to Costco’s liberal return policy but no one thinks that it should be used. Why? If this policy is costing Costco more money than it brings in they would have changed it. But thats not the case. People are buying more than ever and Costco’s bottom line looks good because the prices are right and people think that they will be able to retun anything they are not “100% satisfied with”. However, Costco’s return policy seems to be up to the whim of the employee that you happen to run into should you be unfortunate enough to need hold Costco up to thier end of the bargain.

    I have been a member for many years for the very reason that most other folks are… good prices and a great protection against defective merchandise. I recently tried to return a home theater system that died after 4 years of VERY light use and was told that they would not accept it despite the fact that I am still a member in good standing, I had the receipt and all of the equipment looked as if it were new. I tried to explain to 3 people including the assistant store manger that there was a 100% satisfaction guaranteed retrun policy. The response that I recieved from all of them was perplexing. They all pointed repetedly at the sign on the wall that says 100% satisfaction guaranteed and said thats our return policy, we cant accept this. When I pressed them for where it excludes my non-operational equipment that I am “not satified with” they continued to point lamely at the sign and told me “thats the policy, we cannot accept this.” Now, I understand that 4 years is a good bit of time to return something. However, If Costco means to prohibit folks from returning items they buy after a certian period they should state that specifically in the warranty. However, Costco has only restricted computer returns and nothing else by my understanding.

    So what is Costco’s real return policy? 100% satifaction guaranteed? It certainly doesnt seem so. I sounds like they have the tendency to adjust the policy as they see fit.

    I should also add that I am not a serial returner. The only other thing that I have returned was something that was the wrong size. That item was simply exchange for the correct one.

    • Bill D says:

      So you see no problem at all trying to return something you bought 4 YEARS ago for a full refund?????

      I appluad the manager that had the intestinal fortitude to deny you. You were satisfied with it for the 1st year? 2nd year? 3rd year? then after that, you want all your money back? hmmm. We still have a bike that we bought for my 10 year old from 2004. It no longer is the right size for her, should I take it back?

      “despite the fact that I am still a member in good standing, I had the receipt and all of the equipment looked as if it were new.” you mean despite the fact that it does not have all the bells and whistles that the newer units have? It is a 2003 model product!

      It is people like you that caused them to change the store policies. you should be ashamed of yourself.

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