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Sunday, January 28, 2007

Blue note at Costco: bait-and-switch coupons

Let me start this post by noting that generally, I am a highly satisfied member of Costco. I've written about it on this blog a few times. But my experience of the last week and a half at our local Costco warehouse has caused a downgrade in my opinion of the place -- from a 9 to an 8.

The problem is a coupon book that arrived at the house shortly after Christmas. It included tickets for all sorts of great deals from Jan. 8 to Jan. 28:

Two items in the book caught my eye. One was $8 off on diapers and baby wipes -- our littlest one is just about out of dipes, but we still need a supply. The other was $15 off on a 160GB external hard drive. One of my New Year's resolutions is to get all of our digital photographs in good order, and a USB add-on drive is a key part of the plan.

I went out to Costco three times during the three-week special deal period to try to buy these items. Not only were the hard drive and the baby wipes not in stock, but there wasn't even a place anywhere in the store that looked as though they had ever been in stock. On the 19th -- my second try -- I was assured that shipments of both were supposed to arrive on the 25th. They weren't certain what time on the 25th, but some time that day.

I showed up first thing in the morning on the 26th, and neither item was anywhere to be found. A young man in the electronics department told me that some of the hard drives had arrived on the 25th, but they were all pulled for customers who had rain checks. When I then went to the member services desk to inquire, however, I was told that no rain check could be issued to me. (Of course, no one said anything to me about rain checks the first two times I asked after these items, either.)

The gal behind the desk gave me her best helpless peon act, mumbling something about it being a manufacturer's issue, as if the lack of adequate supply in the warehouse was somehow the manufacturer's fault. Of course, it wasn't a manufacturer's coupon I was holding in my hand -- it was a Costco coupon. But that did not appear to register with her as a fact of any significance. She also asked whether I had driven around to the other Costco warehouses in the area to seek out the bargains there. Of course not, and I wasn't about to.

Of course, there were plenty of other hard drives and baby wipes on the floor, ready for purchase. But there were no deals to be had on them, and the coupons wouldn't work.

The hard drive coupon says that that item is also available on But by the time I got home on the 26th, at least, it wasn't. No sign of it there.

So there you have it, my first bad Costco incident in memory. Obviously, they lured people into the store and onto their website with coupons that they knew they'd never be able to fulfill. The staff gave conflicting advice -- or no advice at all -- about the availability of rain checks. And they tried to pass the blame off on the manufacturers of the goods, when from all appearances the extreme shortages were all Costco's doing.

Bait-and-switch coupons, even if legal, are bad business practice. The $23 in savings that I didn't get, despite three trips out there to get them, pale in comparison to the hit to customer goodwill that this kind of thing causes. The next time a Costco coupon book shows up, I'll be taking its claims with a large grain of salt.

Comments (31)

I know in WA state I'm always offered a equal value substitute. At any kind of store.

Not sure of all the legalities here, but it is my understanding that if they advertise it for that price (with or without coupon), they must honor that price. If the item is out-of-stock, they must offer a rain check - unless it says in the fine print: "limited to stock on hand."

I'm not a Costco shopper, but I always ask for a rain check - or better yet (they let you do this at Safeway) - to substitute a similiar item.

Always ask for a rain check. They don't often tell you that, but now you know.

Way down in the fine print on the back it says, "Offer limited to inventory available from manufacturer." Again, like the manufacturer is somehow at fault for the lack of a meaningful supply at Costco.

Hey, if you can't honor the coupons except for a relatively few lucky members who happen to show up during a window of a few hours in a three-week period, then don't send out all those coupons.

Hey, wow, Costco engages in shoddy biz practices! But Jack, you can at least sleep well knowing that those employees who gave you incomplete/misleading information were well-paid...

Oh, and not to get your dander up, but you may/may not want to read this:

NYT love letter to the tram...

Off topic, and who really cares any more? The entire agenda of city government over the last decade has been to get city commissioners' names in the Times. The stupider the item for which they are being recognized, the better.

One point missing about the tram is this:

OHSU is a great medical school/residency training hospital, obviously. Several potential med students/residents who have visited recently all commented on the natural areas, new tram going up, and the skybridge. Which speaks clearly to me, one big reason of building the tram was to make OHSU more large scale to medical students/Doc/Residents/Fellows..etc.

If Portland retains half of the medical school grads from out of town who attend OHSU, we will be sitting pretty in multiple venues.

Sorry, didn't mean to hijack the post.

$57 million (and although everybody in the media's throwing that number around, it isn't the final tab) would have bought a lot of scholarships.

Please, no more tram in this thread. Put it here.

My guess is that marketing/couponing folks have a 07 schedule, preprinted, preslotted already in the can. Operations & shipping & supply can't keep up 100% on the backside.

C'mon Costco mgrs, post a reply here.

FYI there's a HUGE problem with this at IKEA. If you've never been, don't necessarily wait breathlessly for PDX to open. At least not for the monthly specials. I have shopped IKEA repeatedly in Chicago and Seattle (cool products, don't misinterpret) plus I know someone who works in corporate. It is very easy to befriend an 'associate' on the floor and have them go off on the discrepancy of their coupons / prices vs. actual product available for purchase. One guy in Seattle told me that it's almost a joke.

Personally been victimized: made a trip to Seattle once, specifically, for a coupon'd item (just like you did Jack, to Costco) only to find it ain't in the zip code.

Hmm, I dunno Jack. I have never had a problem like that at Costco. And I use those coupons all the time. I have three in my wallet now...

Although I go to the store in Beaverton.

I was successful on my 2nd try to get the diapers & wipes. It's the first time that has happened to me. This won't help in your case, but my advice on Costco is "if you see and like it, buy it because once it's gone, it may never come back". Costco still has a great return policy even though their product availability is inconsistent.

I had a great Costco experience this weekend. My wife needed new tires, so I ordered them online last week. The $60 coupon was automatically applied at checkout. They came in a few days later and we went down Sunday to have them installed.

There were two guys working and I got there right at opening since they don't take appointments. They had my car pulled into the bay before I even finished going over the warranty paperwork with the other guy. Whole job took about 30 minutes. The Hillsboro store is great.

The Oregon Unlawful Trade Practices Act (UTPA)has specific provisions that deal with "bait and switch" tactics like this. Obviously Costco is a big outfit and their buyers know exactly how many of these things they are going to get when they place their orders. Short of a natural disaster or what have you, it is not a defense to say that it was beyond your control as a retailer to have the product in stock as promised. The last time I checked (it's been 8 or more years ago) the UTPA has a minimum damages provision of $200, plus attorneys fees. The Oregon State Bar puts out a Consumer Law CLE that goes through the particulars of the UTPA. If it's about the principle of the thing, then you kinda sorta have a remedy. This kind of thing gets pretty irksome especially when they never had the thing to begin with. Although posting about it on a high traffic blog like this is certainly not taking it while laying down, and most likely gives a measure of satisfaction as well.

Oregon Unlawful Trade Practices Act, ORS 646.601 et seq.

Somewhere in the many "unlawful acts" definitions section is under 646.608 is one about a retailer having to have enough stock on hand to meet reasonably anticipated customer demand. Don't have the text in front of me right now, so I can't give youthe subsection. Somewhere in 646.608 (1) .

Anyway, a retailer runs afoul of this in the situation you describe, unless the coupon says on its face "limited to stock on hand." The way out for the retailer is to issue a rain check and honor it when stock arrives.

If the retailer does not do a rain check, a customer could take the retailer to court -- minimum damages are $ 200.00, plus attorneys fees.

Odd that you mention this, but I had the same problem with the Tigard Costco on the CO detectors advertised in the same coupon book. Went in on January 10, none in stock. Went and asked for items, was told by Costco drone they hadn't arrived. Asked for a rain check. Was told by same drne that Costco didn't do rain checks. Told drone that Costco had two choices, issue a rain check or get sued by me and face an inquiry by the Oregon AG's office.

Three levels of manager later -- the first two of whom denied that Costco does rain checks -- a guy comes out from some hidden office with big black three ring loose leaf binder where he proceeds to write down my name and phone number and promises to call when stock arrives. In that binder, organized by vendor and item, were lists of lots of folks who were looking for coupon items that were not in stock on third day of sale.

Not quite a rain check, but one way - inefficient though it may be (Freddies little pad of white paper rain checks is the best and most efficient system I've seen for ran checks) of tryng to resolve the problem.

Finally, last Friday, January 26, I get a voice mail from Tigard Costco that stuff is in stock and I should come get one before they are all sold out. Apparently at the Tigard store there was no policy of "reserving" an item for folks who had complained.

Costco bears considerable watching from a consumer point of view. Per ounce prices are often not as cheap on items as can be found iat Winco; Costco employees are frequently both ignorant and rude, and the "Customer is always wrong."

In my humble opinion, Costco has now added to that litany what appears to be a corporate policy of not honoring sales promotions and actively discouraging customers from pursing sales prices when stuff is out of stock.

If you want to have fun call the Financial Fraud ection of he Oregon Department of Justice and file a complaint as to Costco.

Costco's broken the Oregon law if it "[a]dvertises real estate, goods or services... with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity."

The coupon fine print says "Offer limited to inventory available from manufacturer." Whatever that's supposed to mean. "Available," meaning Costco was willing to pay for it? It's not like there's a national shortage of Huggies baby wipes, is there?

I kept forgetting the coupon for Skinny Cows. Probably better for my waistline, skinny or not.

Costco bears considerable watching from a consumer point of view. Per ounce prices are often not as cheap on items as can be found iat Winco;

Meat quality is 10 times better though..
And usually within a few cents per pound.
Not to mention, the checkout lines are much shorter at Costco.

Costco employees are frequently both ignorant and rude, and the "Customer is always wrong."

Wow, you must really have a bad Costco store...never been that way for me, ever.

Hell, one time I had a 27" tv go out on me 5 months after I purchased it from Costco. I still had the receipt, so I took it back without the box, told them the problem, and they refunded my money.

I guess I just dont understand the point of suing because a store doesnt have something in stock. I dont have that kind of time. I just go somewhere else, and tell them so.

As I say, I'm generally quite happy with Costco. Their returns policy seems pretty liberal, and they generally provide service with a smile. As one commenter noted, you can never count on what's going to be on the floor at any given time, but I can live with that given the other benefits of membership. This coupon thing was a drag, though.

Sue Costco? Boy, you must be angry and unemployed or a retired lawyer with nothing better to do. Suing over a few boxes of diapers? Talk about PATHETIC. A few of you folks really need to get a life!

""Available," meaning Costco was willing to pay for it?"

Available probably means how much the manufacturer is willing to part with at the price Costco is willing to pay. My guess is that the manufacturer isn't going to give Costco an unlimited supply of hard drives at (for example $100 a pop), even if Costco wants a huge supply for its customers. Thus, the language is exactly appropriate.

And I've gotta say, Nonny Mouse must have some anomalous Costco folks nearby. "Costco employees are frequently both ignorant and rude, and the "Customer is always wrong"" is just flat wrong. I've been a member for 11 years (so maybe I'm just a rookie), but aside from not buying stuff when it was in the store (and having it be gone), I've never had a single bad experience there.

I went to buy the diapers at Costco, too. They WERE in stock but I was shocked at the price of them. They were $37.99! The last time I bought them they were $29.99.

Now I will say that it has bee a while since I bought diapers at Costco as I found the White Cloud brand a Walmart is much cheaper and just about the same quality. Try them - they are always in stock and always cheaper!

Available probably means how much the manufacturer is willing to part with at the price Costco is willing to pay.

Well, then it just means "Offer limited to the supply we feel like buying." Which is no different from "Offer limited to stock on hand." They could have said that, but they didn't.

I ran into the same bait and switch trying to buy TurboTax. The product wasn't on the floor, but they "were trying to find some out back." Half an hour later, still no TurboTax. So, I requested a rain check. Request denied. "We can't give you a rain check when we have an item in stock." "Then sell it to me." Thought I was Alice in Wonderland.

Another side to that coin: I bought TurboTax in December, paying regular Costco price (still good), only to find out a couple of weeks later that I should have waited for the coupon.

"I bought TurboTax in December"

At least you get the deduction for 2006. 8:}

I wish. Between the AMT and the 2% "miscellaneous" haircut, the TurboTax is all on me.

If you purchase something from Costco and a coupon comes out, they will always pay you back the difference within 30 days of your receipt.

I bought Turbo Tax and Quicken near the end of December, only to see the coupons for January. I took the coupons and receipt in to Costco and they refunded me the $10 & $15 back for the coupons (A total of $25 back!).

I work for a company lucky enough to sell products to Costco. The products are produced in configurations unique to Costco, so we build to order (after making an informed guess as to expected volume) and build no more than that (so as to limit unsold inventory at the end of the season). Reorders are possible (we certainly encourage it!), but with the narrow seasonal window for our products it is not always possible to restock in time. Packaging takes time to print, production schedules are full, and off-shore components take 30 days or so to get here. I don't know, but I suspect, that the out-of-stock coupon items were subject to the same forces as our seasonal products - the coupon expiration being analogous to our seasonal constraints.

Hey guys. Sorry to hear about your crappy coupon experiences at the local Costco. Having worked for the company a long, long time, I know quite a bit about our rain check policy.

It is really quite simple. If the store runs out of product, and it states a rain check will be issued (on the back of the coupon) they give you one at the register. This prints out a receipt for the member that they bring back with the coupon later. Seems like the store you were at has does not have the correct information.

At my store we ran out of the baby wipes and were issuing rain checks for the combo coupon. I really don't understand why we wouldn't take care of the member, since you guys are the reason we work there.

I would say that this year, 80-90% of the time we have the items in stock the entire time. Some items that are very hot, like TV's or electronics often have rain checks issues on the last few days.

Like any company though, if that store's management doesn't inform the front line employees the current rain check plan, everyone suffers. They are supposed to print out a rain check scan sheet, so every cashier can issue one when the time comes.

Make sure if you guys ever have any issues to contact the corporate office, as they are quick to respond to any issues. They will make sure you are taken care of.

Hi Jack,

Did you ask to speak to a Manager? I agree with Madam Hatter. Now you know to ask for a rain check next time!

I asked for a rain check, and was told they didn't issue them. I didn't do the whole "demand to speak to a manager" thing, as I didn't realize at the time that you'll get different stories at Costco, depending on whom you talk to. If there's a next time, I definitely will.


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Penda Diakité - I Lost My Tooth in Africa
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Charles Larson - The Portland Murders
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William H. Colby - Long Goodbye
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