The One Costco Member Perk That May Be Illegal

By Joseph Farago | Published

costco store

Costco is known for selling its products in huge, bulk packages through a monthly membership. Those who visit the chain religiously swear by its cost-efficiency with an extensive line-up of home goods and groceries. On top of their retailer stores, Costco also runs some gas stations nationwide. The chain is now attempting to make their gas stations for members only, which may cross legal boundaries.

Starting on July 5th, people who don’t have a Costco membership won’t be able to obtain gasoline from company-owned stations. This is a brand new implementation by the retailer and may not be entirely legal. Many have flocked to Costco-run gas stations because of their generally lower prices than the national average. In New Jersey, the Costco gas average was $4.83, which is 20 cents cheaper than the national average for unleaded gasoline.

This isn’t the first time membership-based retailers attempted to restrict their accessible gas stations. In 2004, warehouse clubs like Costco tried to make their stations exclusive in New Jersey. But according to the state’s law, limiting gas sales to certain citizens is illegal. Warehouse clubs abandoned the venture once these plans interfered with New Jersey state law. But today, Costco is back to implementing membership-only gas stations operated by the retailer.

Though New Jersey went through a similar issue almost 20 years ago, which denied warehouse clubs this exclusivity right, Costco is apparently trying to implement it again. The Attorney General of New Jersey who oversees the Division of Consumer Affairs hasn’t yet commented on Costco’s latest venture but will have to step in if the company further infringes on state law. But, others speculate that the New Jersey law isn’t as restrictive as certain legislators once advertised.

An industry analyst told the newspaper Courier-Post that the New Jersey gas law might allow warehouse clubs like Costco to restrict who buys their gas. I see nothing in state law that prevents them” from issuing this policy, the analyst said. Only time will tell if New Jersey legislators will step in to stop Costco’s approach, but the overriding of the company’s similar 2004 plan may not occur the second time around. Though state laws prevent gas stations from selling it to exclusive groups, warehouse clubs and other retailers that require memberships may be factored out.

For most, Costco’s membership-only policy is known almost universally. Since its in-store products can only be accessed through a Costco card, many believe that the gas stations operate similarly. This is true for most states, but New Jersey Costcos have not required people to have a membership to pump their gas for more than 20 years. It’s almost a secret that New Jersey Costco gas stations are available to anyone since all other stores and stations around the country operate oppositely. This may be why most locals aren’t too stunned by Costco’s new exclusivity policy since many might not have known those gas stations were accessible to all residents. New Jersey’s Attorney General is expected to interfere in the upcoming months if Costco’s gas station restrictions are illicit.