Costco illegally overcharged customers who made purchases on its website and misled them about how it charged shipping and handling, a proposed class action lawsuit alleges.
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The proposed suit, filed in Federal Court in Montreal, claims that the popular warehouse retailer charged customers more for products sold online than it charged for those same products in its physical stores.
Jocelyn Ouellette, a lawyer at Perrier Attorneys who represents plaintiffs in the proposed suit, said that violates a section Canada’s Competition Act which forbids a practice known as “double ticketing” — when retailers display more than one price and charge the higher one.
“In fact, it says that if you advertise the same product at two different prices, then you are bound to sell it at the lower price, which is not what Costco does,” Ouellette said in an interview Thursday.
The proposed suit also alleges that Costco violated another section of the Competition Act, which bans false and misleading representations, Ouellette said. While one part of the Costco website informs online shoppers that shipping and handling fees are included in the in the higher online price, when customers check out, they’re presented with calculations that show the cost of shipping and handling as $0.
That could lead a customer to believe there aren’t any shipping and handling fees, Ouellette said.
“When you fulfill your purchase on the internet, you might think that you’re not paying some shipping and handling fees, when fact you are,” Ouellette said. “If you were able to compare the prices in store and on the internet, and let’s say, you see a difference of $10, you could see that there’s $10 in shipping fees that you would not know about, but if you buy three or four of the same item, then you’d be paying that $10 three or four times, which is something that the internet customer is unaware of.”
According to the proposed suit, one part the Costco website tells customers that it will indicate which products can be found for a lower price at a nearby store, but the website doesn’t actually do that in a systematic way. The proposed suit alleges that is also a violation the ban on false and misleading representations.
“In the absence of this message, the consumer is likely to think that the product is only available online and to not know that it could be purchased at a lower price in store,” the proposed suit reads.
The proposed suit’s representative plaintiff, Ibrahim El Bechara, purchased a blender from the Costco website last July, but when he later went to a Laval Costco, he found that it was being sold for $5 less in the store, according to a court filing.
El Bechara made several further purchases from the website in October and November, including food storage containers, a vacuum sealer and socks, only to find that those products were being sold for between $4 and $10 less in Costco stores, according to the proposed suit. But when he made those purchases, the website displayed shipping and handling fees of $0.
Other products, including water filters, irons, crock pots and mixing bowls, were also found to be selling for between $7 and $10 more online than in stores.
The lawsuit must be certified by a judge before it is allowed to move forward as a class action. If it is certified, it would include all Canadians who purchased a product on Costco’s website or mobile application since Dec. 23, 2022 and who paid a higher price than what was displayed in Costco stores for the same product.
Ouellette said he doesn’t yet know how many people would be included in the class.
The suit seeks an injunction ordering Costco to end the practice of charging more online than it does in store, as well as damages for customers who made purchases online.
“We’re seeking for them to change their practices and to respect the law and we’re seeking monetary compensation. Precise figures are unknown at this point because we’re way too early in the proceedings, but it will be monetary compensation,” Ouellette said.
Costco did not respond to a request for comment made Thursday morning.