Social media has some positives. If you love videos of dogs that befriend cats or people taking hilarious falls from their skateboards, well, you can lose days into the YouTube, Instagram, or TikTok vortex.
You can also use social media to learn how to do pretty much anything. That's a real positive when it comes to recipes or home improvement projects. There's basically a tutorial on anything you might imagine somewhere on social media, and that can be very helpful.
DON'T MISS: Costco Shares Some Important Pricing News
Those "helpful" videos, however, can also cause a lot of problems. Both Starbucks (SBUX) and Chipotle (CMG) have had to make changes to their apps when various social media "stars" have shared hacks that cause problems for in-store employees.
In abstract, it might be neat to learn how to get a bigger burrito for less money or be able to order some novel Starbucks drink that's not on the menu, but in practice, these "hacks" have consequences. It's sort of like password sharing on a streaming site -- it may seem like a victimless crime, but it's still a crime.
Now, Costco (COST) has found itself in the same situation Netflix and other streaming services are trying to deal with.
Customers are violating the chain's rules by sharing their membership cards, which has forced the warehouse club to crack down on checking whether people making purchases are actually club members.
Brooks Kraft LLC/Corbis via Getty Images
Costco Has a Membership Problem
When you give someone your streaming password so they can watch content without paying, you're stealing from the company. That may not seem like a big deal given the size of streaming giants like Netflix (NFLX) and Walt Disney, (DIS) but it's sort of death by a million cuts for those companies.
If one million people opt not to subscribe to Netflix because they're "borrowing" an account, that's $15.49 for each standard subscription or nearly $15.5 million a month and $186 million a year. You can buy at least a few shows with nearly $200 million, so password sharing isn't a crime with no consequences. It's one that costs the company and its paying members.
That's roughly what happens to Costco when people follow the various social-media hacks that show how to share a membership.
The warehouse club makes most of its profits from selling memberships, not from selling goods. So, if people are getting around the membership requirement, they hit the company directly in the bottom line.
Costco Cracks Down On Membership Enforcement
At some of its warehouse clubs, Costco has stepped up checking whether people are actually members before letting them check out.
"I was at my local Costco in Livonia, MI and this was at the self checkouts. They also had someone checking photos, on membership cards, prior to going to the register," Reddit user Tiduran posted alongside a picture of a sign detailing the policy.
The sign was sort of a polite reminder, under the headline. "A Reminder to Our Members."
Members are required to show their membership card when entering any Costco. and when checking out at a register. Membership cards are not transferable. Only paid members are allowed to shop.
Costco charges $60 for a regular Gold Star membership and $120 for an Executive membership, which comes with 2% cash back on most purchases up to $1,000.
During the company's third-quarter-earnings call, Chief Financial Officer Richard Galanti said that membership continued to grow.
"Membership growth continues. We ended Q3 with 69.1 paid household members and 124.7 million cardholders, both up approximately 7% versus a year ago," he said.
"At third quarter end, we had 31.3 million paid Executive members, an increase of 681,000, or 57,000 per week during the 12-week fiscal third quarter."
That's in line with the steady growth Costco usually posts quarter over quarter.
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