Costco is testing a membership change to crack down on card sharing. Here's what you should know: KABC-TV

NEW YORK — Bad news if you want to revoke someone else's Costco membership: The retail giant is cracking down.

When you enter Costco, you must show your membership card to an employee to shop. Costco membership cards are not transferable, but the company allows members to give a second household card to another person in their household. The company stipulates that anyone who has a card can bring up to two guests to the club during each visit.

But Costco has noticed non-members sneaking in with membership cards that don't belong to them — especially since Costco expanded self-checkout.

To crack down, Costco recently began requiring shoppers' membership cards along with photo ID at its self-checkout lanes, the same policy as regular checkouts. “We do not believe it is right for non-members to receive the same benefits and prices as our members,” Costco said in announcing the change.

And now Costco is testing a system that requires members to scan their membership cards at the store entrance — instead of just showing them to employees. Shoppers spotted the new scanners at a store in Washington state and posted photos on Reddit.

Richard Galanti, Costco's chief financial officer, told CNN that more people have shared their memberships since the pandemic hit in 2020.

Costco is testing the scanners in some stores to see if they help. The scanners also eliminate the need to ask customers for their membership cards at checkouts and self-checkouts.

“It speeds up the process at the entrance and speeds up the process at the checkout,” he said. “This is what we believe in and we will pilot it.”

It's the latest example of Costco and other companies like Netflix cracking down on membership sharing.

Costco had around 66 million paying members and 119 million cardholders in 2022, making it one of the largest membership clubs in the world. Costco members pay either $60 per year for a regular membership or $120 for an “Executive” card, which includes additional perks.

The membership model is crucial to Costco's business, which has boomed during the pandemic. Annual fees help increase the company's profits and offset expenses, allowing Costco to keep its prices low. Any change in membership growth or renewal rates could hurt Costco and force it to raise prices.

The retailer generated $4.2 billion in membership fees in 2022, up 9% from 2021, with a high renewal rate of 93%.

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The CNN Wire
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