Here’s Why Costco Is Cracking Down on Membership Sharing

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Costco has gotten stricter about sharing memberships recently, but there’s a reason for it. Read on to learn more. [[{“value”:”

At a time when so many consumers are continuing to struggle with their personal finances, many people are taking steps to try to save a bit of money. And for you, that might mean piggybacking off of a neighbor’s Costco membership instead of buying your own.

But Costco is getting stricter about membership sharing. And soon, it may be even more difficult to benefit from the store’s offerings without ponying up yourself.

Some big changes are in the works

Costco is implementing a few changes that could be problematic for non-members. First, it’s adding card scanners to some store entrances (with the possibility of ramping up over time). This way, membership cards can be verified on the way in, and non-members can’t get away with sneaking in.

Additionally, Costco has announced plans to limit food court purchases to members only. So come April, the option to waltz into Costco for a cheap hot dog and soda may be off the table if you’re not a paying member.

It’s not a matter of corporate greed

You might assume that Costco’s membership sharing crackdown is stemming from a desire to bring in extra revenue. But that’s not really the main reason why Costco is getting stricter.

Sure, Costco would no doubt love to grow its membership base. Those annual fees comprise a huge chunk of the company’s revenue. Rather, the reason Costco is cracking down on membership sharing boils down to wanting to make things fair and pleasant for existing customers.

During the company’s most recent earnings call, CFO Richard Galanti explained the company’s stance by saying, “We also had complaints from members saying, ‘I pay. Why shouldn’t they?’ So the view was we needed to just shore that up a little bit, and we did.”

Galanti went on to say, “Are we getting some new sign-ups from it? Absolutely. But it’s — relative to the 60 million or 70 million members, it’s not terribly meaningful, but it’s more fair and the right thing to do.”

In other words, yes, Costco’s new policies may be boosting memberships to a modest degree. But more so than anything else, they’re designed to make sure the system is fair. After all, why should one shopper have to fork over the money for a membership while someone else gets to game the system?

Also, allowing non-members into the store and giving them food court access could lead to bottlenecks at checkout for paying members. That’s not fair. So that’s another reason Costco is limiting non-member access.

Should you join Costco?

A basic Costco membership has a price tag of $60 a year, while an Executive membership costs $120. With the latter, you get 2% cash back on your Costco purchases.

To see if a membership makes sense for you, tag along to Costco with a friend or neighbor and jot down the prices of the items you’re most likely to buy. Then, compare those prices to what your regular supermarket charges. If you think you’ll save enough to make up the cost of your membership, then joining makes sense.

Furthermore, if you’re someone who’s been known to sneak into Costco, then you’re probably already aware of how much savings you can enjoy by shopping there. So at that point, it’s more a matter of whether you can swing the cost of a membership.

If you can’t afford that fee, it’s understandable. But you may have to accept that soon enough, getting into Costco, whether for purchases or a meal, is not going to be easy if you don’t have a paid membership in your name.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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