Costco Wholesale Corporation (NASDAQ: COST) is reportedly implementing stricter measures to prevent card-sharing among customers. The company now requires photo identification and customers' membership cards at its self-checkout registers.
The move follows a trend of companies, including Netflix Inc (NASDAQ: NFLX), trying to curtail the sharing of paid memberships.
Costco said it has always asked shoppers for membership cards at the cash registers when they check out. Now, it is also requesting to see cards with a photo at self-checkout registers - and to view a photo ID if a shopper's membership card has no picture.
Costco stated that the move aims to prevent nonmembers from reaping the benefits and pricing available to the members.
Citing CFO Richard Galanti, Wall Street Journal reported that the issue of non-cardholders using self-checkouts came to light during an operation meeting a few months ago.
Although a small percentage of customers misuse the service, the company aims to correct the issue given the scale of Costco's operations.
In 2022, Costco generated $4.2 billion in sales from membership fees, up 9% Y/Y. The company says the fees help offset expenses, allowing Costco to offer lower prices.
Customers pay either $60 annually for a Business or Gold Star Membership, or $120 for an Executive Membership, each with an extra card for another person in the same household.
As of May, Costco had 124.7 million cardholders from 69.1 million households, according to third-quarter SEC filings.
Price Action: COST shares are down 0.46% at $530.33 during the premarket session on the last check Thursday.