If you’ve ever forgotten to return an unwanted item to the store, you know how frustrating it can be to get stuck with merchandise you can’t use. And while many retailers offer reasonable return windows, sometimes it’s just not enough time.

Last month, I lost out on a $45 return because I couldn’t make it to the store in time for the Jan. 31 deadline. 

An outfit I’d bought my daughter for the holidays didn’t fit right, and the store generously extended its return window to Jan. 31 for all pre-Christmas purchases. But a string of viruses and work deadlines sidelined me to the point where I couldn’t get the return done on time. 

For this reason, I’m very grateful for retailers like Costco that offer extremely generous return policies.

For the most part, Costco allows you to bring back any item for any reason at any time. And you don’t even need to show a receipt. 

But these days, retailers across the board are losing loads of money to problem returns, so they’re getting stricter with their policies. And Costco has started to follow their lead.

Costco is known for its lenient return policies.

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Returns cost retailers billions of dollars

Retailers began offering competitive return policies to build loyalty as consumers became more reliant on online shopping, ReverseLogix.com CEO Gaurav Saran told FOX Business. But that also led to some shoppers taking advantage.

Fraudulent returns and claims alone cost U.S. retailers about $103 billion in 2024, according to Appriss Retail and Deloitte. That represented about 15% of all returned merchandise that year.

Total returns in 2024, meanwhile, hit $685 billion, roughly 13.2% of all retail sales.

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“Returns are a significant cost for retailers, and the rise of online shopping could increase this trend,” said Kevin Mahoney, retail managing director for Deloitte Consulting LLP, in the Appriss Retail/Deloitte report. 

Of course, not all returns are fraudulent. But the reality is that they still cost retailers money in a number of ways.

First, there are restocking and shipping costs to deal with. There’s also the labor retailers need to pay to process returns. 

Plus, returns devalue inventory. It’s not a given that returned items can be sold for their original price, or sold at all.

Costco gets more serious about its return policy

A big reason I’ve been more than happy to pay for a Costco membership for 20 years and counting is that the warehouse club giant has one of the most flexible return policies in retail. But even Costco has its limits.

It used to be that you could get a refund for food products with quality issues without having to haul those items back to the store. But the last time I tried to do that, I got pushback.

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What happened was I’d purchased a gallon of milk that, despite being unopened, went bad five days before its sell-by date. When I went to customer service a couple of days later, I shared the date of my purchase and asked them to look up the item based on my membership number.

The customer service representative told me that I needed to physically bring the spoiled milk back to the store to get my money back. I found that interaction both surprising and annoying, given that Costco is usually quite reasonable and flexible with things like this. 

Now it could be that the customer service rep was having a bad day and wasn’t in the mood to be accommodating. It happens. 

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But in talking to fellow Costco members, I’ve heard across the board that the company seems to be getting stricter with returns. 

“In my recent experience, the former ‘no questions asked’ return policy of 10+ years ago has tightened up some and the employees tend to really dig in on some of the items,” one Reddit user said. “It just doesn’t feel like the same easy/friendly experience it was when I first joined.”

Costco’s return policy has some exceptions

While Costco will generally take back items with no questions asked, there are exceptions to that rule.

  • Electronics have a 90-day return window.
  • Diamonds have to go through a vetting process before refunds are issued.
  • Products with a limited useful life expectancy, such as batteries and tires, may be sold with a product-specific limited warranty.
    Source: Costco

There are also certain items Costco will not take back, including the following.

  • Cigarettes and alcohol
  • Event tickets
  • Precious metals
  • Shop Cards
  • Gift cards
    Source: Costco

Of course, Costco’s recent crackdown on returns may stem from an uptick in members trying to abuse their very reasonable policy. In 2024, a member went viral after sharing her story of returning a couch two years later simply because she decided she no longer liked it.

But there’s a big difference between trying to return a years-old couch and trying to return a $3.50 carton of spoiled milk.

Costco is correct to be more stringent with its return policy, because if it loses a lot of money to bogus returns, it impacts the company’s bottom line. And from there, members risk seeing prices go up.

But the company may want to go back to the days of easy returns for low-cost, low-stakes items for the sake of member retention. 

Maurie Backman owns shares of Costco.

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