They returned used toilets and dirty rugs to Costco. Then came the backlash.

Indianapolis Star

3 days ago

Evelyn Juarez is a proud card-carrying executive member of Costco. She jokes it's the only black card she owns.
Every week, her heels click up and down the warehouse aisles as she hunts for new deals, stocks up on groceries and grazes on samples.
In nearly two years, Juarez never returned a purchase, even when her newly purchased rug began to fray. But then her 2-year-old daughter smuggled a bucket of slime into the living room and slopped the blue goo on her ivory-colored rug.
Juarez was about to chuck the stained rug when a friend urged her to take it back instead. 'I was like, girl, are you trying to embarrass me?' replied Juarez, a 29-year-old mother of two and social media influencer from Dallas.
But then she got to thinking. 'You know what? I have been spending thousands of dollars. I just bought my couches from Costco, too. I don't think $150 will hurt them.'
She was nervous as she approached the return counter but minutes later, Juarez walked out of the warehouse with a full refund. The next day, she bought a replacement rug from Costco.
'After that, I am going to keep my membership forever,' she said. 'I am not sure if it's out of guilt or out of amazement.'
From low prices on quality products to the wildly popular $1.50 hot dog-and-soda combo, Costco knows how to worm its way into shoppers' hearts and pantries.
One of its most popular perks is the no-questions-asked (or few questions asked) "risk-free 100% satisfaction guarantee" return policy that fills shoppers with buying confidence and their carts with splurges. Costco gives its customers who pay annual membership fees of $65 to $130 an unlimited grace period to return most purchases for a full refund.
But the liberal policy has become a touchy subject as eyebrow-raising returns go viral, from toilets still sloshing with dirty water to Christmas trees returned after Christmas. Shoppers regularly square off online over what should – and should not be – returned. The online fury reached a fever pitch in 2024 when a Seattle woman got a full refund for a 2 ½-year-old couch because she no longer cared for the color.
Rampant abuse sets off fears that the warehouse club will roll back its generous return policy, said Addison Marriott.
Marriott, 24, who works in advertising, took some heat when she and her husband returned an air conditioning unit they bought to weather the sweltering summer months in their one-bedroom Los Angeles apartment and then posted about it on TikTok: "We broke married kids love your return policy."
'People were nervous that if the video blew up, Costco would find out and restrict their return policies,' Marriott said.
Parker Seidel, a 26-year-old YouTube creator from Orange County, got blowback when he tested the limits of Costco's return policy with a series of stunts, getting his money back for a half-eaten chicken bake and three-week-old flowers he never put in water. Next up: Returning a Vincent Van Gogh Sunflowers Lego set after completing it.
'I was getting so much hate. I was like, 'Oh my god, I was not expecting this at all,'' Seidel said.
For Juarez, what she calls 'carpetgate' blew up on TikTok, where she has 2.4 million followers. 'You are so classless,' one person commented. 'Girl what, your kids stained (the rug) and now you are making it Costco's problem?'
'You are paying for the perks of having products that you can buy and products that you can return,' she told USA TODAY. 'It's a really good way that they hook you in. I am sure that they make way more money off of us purchasing stuff than they lose from returns.'
Costco did not respond to requests for comment on its famously lenient return policy but David and Susan Schwartz, the husband-and-wife team behind the 2023 book, 'The Joy of Costco: A Treasure Hunt from A to Z,' say it dates back to the company's origins.
When they interviewed Jim Sinegal, the Costco co-founder and former CEO told them about a call from a store manager asking if the store should let someone return an unusual and expensive item. 'Jim Sinegal said, 'What are you calling me for?'' Susan Schwartz said. ''Take it back.' And they did.'
That laid-back attitude has stood the test of time and industry headwinds – with an exception here and there. In 2007, Costco limited most consumer-electronics returns to 90 days after returns of flat-panel TVs squeezed profit margins.
"Our view is, even with these changes, we still have the best return policy in the retail industry," former chief operating officer Richard Galanti told the Wall Street Journal at the time.
A lenient return policy is even more important for today's inflation-weary shoppers, said Anna Brennan, principal analyst for club and specialty retailers at marketing data and analytics firm Kantar.
'It all ties back to reducing some of that stress and risk on the shopper and members' part, especially in an environment like the one we're in today, where every purchase feels particularly weighted,' Brennan said. 'I think that really helps the member make some purchases maybe they wouldn't have otherwise.'
How Costco hooks you Come for the hot dogs, stay for the gold bars
That was the case for Troy Pavlek, a 31-year-old software developer from Edmonton, Alberta.
A Costco executive member since 2012, he says he pays to shop at Costco for 'the confidence that anything you buy in the store, the store will stand behind or your money back' and he has rarely had to return anything.
While remodeling his house, he splurged on two $900 toilets. When the manufacturer refused to replace a cracked plastic piece that joined the lid to the toilet on one, he returned the other one unused and still in the box — minus the lid.
According to Ayelet Fishbach, professor of behavioral science and marketing at the University of Chicago Booth School of Business, an ethical dilemma drives the spirited controversy over Costco returns: 'Should people follow the letter of the rule or the spirit behind it?'
Fishbach got an inkling of where most people stood when she surveyed hundreds of consumers on whether they would return lightly worn clothing. About 40% said yes, but that number dropped significantly when they were asked if they would do it repeatedly.
'It seems many people are comfortable occasionally bending the spirit of a policy, and may even find it amusing, but hesitate to make a habit of it,' she said.
Take Susana Rodriguez, a mother of seven from Henderson, Nevada. She returned a canopy used by her small business, Cocos Frios El Primo, after the wind tore it apart in less than two months.
But Rodriguez, 45, said she draws a line for returns after a certain amount of time. Costco told her she could return a TV that was a few years old. 'I didn't do it," she said. "It lasted what it lasted.'
Costco employees on the returns front lines have seen it all, from dirty and stained mattresses to half-eaten trays of cookies. Then there are the shoppers who rent from Costco. Televisions bought before the Super Bowl and returned right after. Chairs and tables purchased for an event and wheeled in the next day.
A couple of the staffers spoke with USA TODAY on the condition of anonymity because they feared they could lose their jobs. While they wish people wouldn't take advantage, they say the return policy does exactly what it was intended to do: It breeds loyalty, drives sales and entices new members.
'It's great because it gives members peace of mind,' one Illinois employee told USA TODAY. 'I'm sure that works in our favor all the time, because people buy things and then they decide they love them and it's worth keeping.'
While most returns are accepted, some repeat offenders get flagged, a Connecticut employee said. One shopper kept returning lighting fixtures purchased nearly a decade ago as she remodeled her home, lightbulbs and all. After a few months, the store turned her away.
'That is pretty common,' the employee said. 'People will remodel their homes and they will literally pull up their flooring and return it.'
In rare cases, when the return policy is 'really abused,' Costco revokes memberships, the employee said. But for most shoppers, she said, 'we'll take anything.'
The store tries to donate as much as it can, she said, but some returns go to waste. Returned food that needs to be temperature controlled, for instance, gets tossed in the trash. She estimates her warehouse throws away 'a few hundred dollars' worth of food every day.
But the policy usually benefits Costco, the employee said. She recalled one instance where a customer was torn between a Costco vacuum and a cheaper model from Macy's.
'I said, 'Well, what if you have to return it? Are they going to accept your vacuum return six months down the road? Probably not. But we will.' So she spent the extra couple hundred dollars and got it from us,' the employee said.
Increasingly, retailers are under pressure to ditch anything-goes policies as fraud and abuse erode profit margins.
Of the $685 billion in merchandise returned in 2024, $103 billion was lost to fraudulent and abusive returns and claims, according to a recent report from Appriss Retail.
In 2018, L.L. Bean traded in its lifetime return policy for a one-year limit, noting that some customers expected returns for heavily worn products or items purchased at yard sales. Duluth Trading Company made a similar switch in 2019.
Retailers have also begun charging restocking fees or for return shipping to recoup losses.
Not Costco. It can afford to absorb the losses because it relies on a membership business model, analysts say. Last year it earned $4.8 billion in revenue from membership fees alone.
Returns are an important part of keeping those members happy, said USC Marshall School of Business marketing professor Kristin Diehl. Research shows that shoppers often base purchases on how hard or easy they think it will be to return something.
More than half of consumers decided not to buy from retailers due to restrictive return policies and almost a third of consumers stopped shopping at stores due to negative return experiences, according to a recent report from Appriss Retail. On the other hand, 7 out of 10 consumers say they made at least one additional purchase because of a positive return experience.
Costco members are less likely to abuse the privilege because returns are tied to their membership and they don't want to get blacklisted, Diehl said. They also consider themselves part of the Costco community.
The return policy fosters a sense of belonging and good will, something Costco has in bulk. It's also 'great word of mouth,' said Neil Saunders, a retail analyst at the research and analytics firm GlobalData.
That's why it's here to stay, he said. Whatever "miniscule cost' from return policy abuse is worth it to Costco.