Lawsuit Targets Costco Over Free Shipping Claims, Hiding Delivery Fees In Product Prices

A California woman is suing Costco, claiming the company misled customers by advertising “free shipping” online while hiding delivery costs in product prices in a case which could potentially have implication across the ecommerce industry.

The lawsuit filed last week alleges Costco advertised shipping charges as “$0.00” on certain online purchases, when in fact the cost of shipping was actually added into the listed product price.

Plaintiff Christina Zaimi says she paid $250 more for a couch on Costco.com than she would have paid in-store, despite a promise of free delivery.

“Costco represents that consumers are paying $0.00 for shipping,” the lawsuit states. “In reality, Costco inflates the price of the product itself to include shipping costs.”

The suit claims Costco’s online pricing model violated state and federal consumer protection laws, breached contracts and warranties, and misled customers through false advertising.

Zaimi alleges she purchased a sectional sofa on Dec. 30, 2024, for $2,349.99 based on Costco’s online promise of free shipping. A nearly identical couch, she claims, was available in-store for $2,099.99 - a $250 difference the suit says was used to cover shipping.

A customer service page on Costco's website acknowledges that online prices “take into account shipping and handling fees not applicable to warehouse purchases.”

But Zaimi argues this disclaimer is buried and not visible during the online checkout process, misleading consumers with shipping cost presented as $0.00 that may lead them to falsely believe the online price is equivalent to the in-store price, with no added delivery cost.

Rob Freund, a brand lawyer who focuses on marketing and ecommerce issues, commented on the case on X - saying he believes the fact that Costco explicitly calls attention to having different pricing in store vs online may violate the FTC's Guide on "free" products and services.

Freund also addressed the question many online sellers will likely be asking - how will this affect the many, many ecommerce stores who offer "free" shipping but add the delivery costs into the product pricing?

Costco has faced similar complaints in recent years, like a lawsuit filed 2024 by plaintiff Annie Song alleging the company deceived her by advertising free delivery while secretly charging higher prices online than in-store, including toilet paper that cost $3.50 more online.

In its motion to dismiss that case, Costco referred to the disclosures on their support pages, arguing that it does not separately charge for shipping on many items and that the “$0.00” at checkout reflects the absence of an added fee beyond the online price.

In response to the Court's show cause order requiring Song to demonstrate why her complaint should not be dismissed for lack of subject matter jurisdiction, she chose to voluntarily dismiss and end that lawsuit in January 2025.

Zaimi is seeking to turn her lawsuit into a class actions, asking for restitution, an injunction to stop the alleged practice, and damages on behalf of all affected customers.

A jury trial has been requested and Costco has not yet responded publicly to this latest complaint.