A new lawsuit against Costco could have major implications for all omnichannel retailers if victorious, raising the question, “Can I charge more online than in-store?”
A California woman is suing Costco for advertising “free shipping” on their website, but actually baking the cost of shipping into their product price. Sounds normal so far, right? Every retailer that offers free shipping is building it into the retail cost of their product. Nothing's actually free.
Here's the difference though…
Costco sold the couch for $250 more online with “free shipping” than the couch actually costs in their stores.
The suit claims that Costco’s online pricing model violates state and federal consumer protection laws, breaches contracts and warranties, and misleads customers through false advertising.
Costco informs customers on a page deep within its website that its online and in-store prices may be different, and that it doesn't price match between the two. However the plaintiff argues that the disclaimer is buried, and that the more prominent “free shipping” is misleading customers into falsely believing the online price is the same as the in-store.
The lawsuit brings in to question what obligations, if any, Costco and other omnichannel retailers have to maintain price parity between in-store and online.
In a previous similar lawsuit from 2024, Costco referred to the disclosures on their support pages, arguing that the “$0.00″ advertised shipping reflects the absence of an added fee beyond the online price — which makes sense to me.
I'm with Costco on this one, legally speaking. However…
Given that this seems to be a recurring issue for Costco in particular, would it make sense for them to transparently display the difference between in-store and online pricing?
It could actually work to their advantage:
🛋️ BIG BLUE COUCH
Online: $2,499 Free Shipping
In-Store: $2,149 Pickup Only
They could still allow the customer to purchase the couch online at the in-store price, and simply reserve it for them in-store for 48 hours to pick-up, during which they'd probably buy some more stuff while there. While I don't think this should be required of Costco, it could be a win-win solution.
What are your thoughts? Is Costco in the right or wrong? Join the conversation on LinkedIn.