ST. LOUIS – A man has filed a class action lawsuit against Costco Wholesale alleging that the mega-warehouse retailer illegally reimburses part of store memberships instead of the entire price as stated in company policy.
The lawsuit filed on April 19 in the U.S. District Court for the Eastern District of Missouri requests a jury trial and claims unjust enrichment, violations of the Missouri Merchandising Practicing Act, and breach of contract against Costco, the second largest retailer in the world.
“Defendant’s actions are oppressive, unethical, and unscrupulous, and have caused substantial injury to plaintiff," according to lawyers for Scott Pearlstone, who claims in the lawsuit that after purchasing the more expensive of two membership options offered at Costco, he decided to cancel. Pearlstone states in the complaint that he reviewed Costco’s “100 percent Risk-Free Guarantee” and was also told by an employee that he could cancel at any time and receive a full refund.
Pearlstone says he purchased the “Executive” membership at the Costco location in Manchester. He alleges Costco instead refunded him the amount he paid reduced by the amount he had earned in the Costco rewards, amounting to less than what he originally paid for the membership, stating in the complaint that Costco is “unlawfully shortchanging consumers by withholding a portion of the money refunded on cancelled store memberships.”
Pearlstone claims there are hundreds if not thousands of people who have also experienced this deception by Costco, and requests to be certified as a class action. The complaint also states Costco is being unjustly enriched by retaining the money owed to customers.
According to the complaint, “Defendant promised plaintiff and the other members of the class and subclass that they could cancel their executive memberships “at any time,” after which they would receive a refund “in full” of the membership fees paid to defendant … defendant instead reduces the amount of a cancelling member’s refund by the amount of Costco store credit earned as part of the executive membership’s 2 percent reward program.”
The lawsuit seeks punitive damages, injunctive relief and other related costs.
United States District Court for Eastern Missouri case number 4:18-cv-00630-RLW