A proposed class action has accused Costco of unjust enrichment after the retail giant allegedly made customers pay for tariffs, then planned to pocket the full refund after they were deemed unlawful.
Costco “collected the tariff costs from consumers through elevated pricing, while simultaneously seeking refunds of the same tariff payments from the federal government,” the complaint alleged. Unless the court intervenes, “Costco stands to recover the same tariff payments twice.”
Filed in a US District Court in Washington, the lawsuit points to public statements from Costco executives that customers said made it clear that the company had raised prices on some goods while the tariffs were in effect. But the company has since offered “no legally binding commitment to return tariff-related overcharges to the consumers who actually paid them.”
Instead of reimbursing the customers who paid more for goods, Costco said on a March 2026 earnings call that it plans to use tariff refunds to lower future prices.
That plan enraged customers who joined Costco based on the proposition that Costco would operate on the slimmest possible margins to ensure they never pay more for goods than Costco can afford to sell them.
Accusing Costco of seeking a “windfall” from tariff refunds, the customers sued on behalf of “millions of consumers who purchased goods from Costco during the tariff period and who paid inflated prices” that Costco executives explicitly linked to the “evolving environment with tariffs.”
“The potential refund pool resulting from the invalidation” of the tariffs is “enormous,” customers argued. Costco “has already recouped tariff costs from consumers through higher prices, and it now stands in line to recover those same unlawful tariff payments from the federal government.”
Costco did not immediately respond to Ars’ request for comment. The company now faces two proposed class actions over tariff refunds, after an earlier case was filed in Illinois this month, the BBC reported.
Costco may face fines for refund plan
The affected goods and specific amount that Costco’s customers paid remain unknown—and should be proven at trial, the customers argued. Reports have indicated price increases on items like flowers, bedding, and cookware. However, as one of the world’s largest retailers, Costco has reported that about a third of its sales are of imported goods that were likely hit with tariffs at some point between February 2025 and February 2026, customers noted.
As early as March 2025, Costco CEO Ron Vachris disclosed on an earnings call that it was “difficult to predict the impact of tariffs,” the complaint noted. Later that same day, a Reuters report confirmed that Costco was maneuvering to avoid ‘big price hikes,’” the complaint said.
But those early moves seemed futile. By the next earnings call in May, Costco conceded that it “had indeed raised the prices on certain products,” the complaint said. Perhaps most frustrating to customers, Costco told investors that following the tariff-linked inflation, the company “did increase some price there because we felt that was something that the member would be able to absorb.”
“Those facts support the inference that Costco did not simply absorb the full cost of the unlawful tariffs; rather, Costco passed on at least part of those costs to consumers through higher retail prices,” the complaint argued.
Customers are hoping that consumer protection laws will require Costco to refund money they paid due to tariffs. The proposed class includes “all persons in the United States who purchased goods from Costco during the period February 1, 2025, through February 24, 2026, that were subject to tariffs” that Donald Trump unlawfully imposed under the International Emergency Economic Powers (IEEPA) Act, the group said.
If customers win, Costco could owe much more than just that. Branding Costco’s plan to keep the refunds as “unscrupulous, outrageous, offensive to the public conscience, and/or marked by injustice, partiality, or deception,” they’ve asked for punitive damages if its actions are deemed unlawful.
Survey: 34% of firms passed on 50% of tariff costs
Costco customers’ claims are intended to finally settle “an actual controversy as to the rightful ownership of the tariff surcharges paid” to Costco.
For other businesses that increased prices, the class action could potentially establish a precedent on who rightfully owns the tariff surcharges customers paid. That could force even more customer lawsuits over refunds nationwide, possibly at a time when businesses’ resources are expected to be heavily tied up in navigating the messy process to secure refunds.
Yesterday, KPMG, a global organization that helps businesses with tax services, released results from a survey analyzing how 300 US businesses similar to Costco passed on tariff costs to consumers over the year that the IEEPA tariffs were in effect.
Beyond confirming that many customers have already paid higher prices across various industries, KPMG reported that the outlook for customers sick of paying tariffs remains discouraging in the near future.
“The share of businesses passing on more than half of tariff costs has risen to 34 percent, more than doubling from 13 percent in May of last year. Further price increases appear imminent, with 55 percent of executives planning to raise prices by up to 15 percent within the next six months,” it said.
