Lawsuit Key Points

  • Illinois customer Matthew Stockov sued Costco Wholesale in federal court on Wednesday, alleging the retailer passed tariff costs onto him and other consumers through higher prices before the Supreme Court last month ruled the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) were illegal, and is now seeking reimbursement of those fees.
  • The proposed class action challenges Costco's recent statement of a "commitment to pass any potential refunds it receives back to customers through 'lower prices and better value,'" arguing in the complaint that this promise is a "possible future benefit" to an "uncertain group of future shoppers," constituting a "hypothetical action" that cannot "make class members whole."
  • The complaint states: "Costco simultaneously charged consumers for tariff costs through higher prices and obtained compensation from the government through court-ordered tariff refunds, constituting unjust enrichment at the expense of class members. Plaintiff and class members are entitled to restitution of the overpaid tariffs they paid, or a pro-rata share of any tariff refunds Costco recovers, plus interest, reasonable attorney's fees, and litigation costs." Costco did not immediately respond to a request for comment.

Background and Industry Impact

According to the Associated Press, Costco is one of several companies sued by retail customers to recover overpaid tariff fees following the Supreme Court ruling, including delivery company FedEx and Ray-Ban maker EssilorLuxottica.

For chief financial officers, consumer lawsuits highlight another critical issue financial leaders must navigate in the complex process of obtaining tariff refunds. Luis "Lou" Abad, head of KPMG's trade and customs practice, said that in addition to preserving legal rights to any IEEPA tariffs, importers that paid tariffs must carefully evaluate their plans for using any refunds they may receive, as well as any obligations or arrangements they may have to share tariff costs.

Abad, in an interview earlier this week regarding the widespread litigation risk companies face, said this requires reviewing potential tariff-sharing arrangements with suppliers, vendors, or customers and understanding whether there is an obligation to share refunds, or whether good faith suggests they should. "This will be the next step or the other shoe about to drop," he said.

Case Details

The lawsuit against Costco was filed by Stockov, a Costco member who purchased imported electronics, food, household goods, small appliances, and health and hygiene products at prices that "increased due to Costco passing on IEEPA tariff costs," the complaint alleges. The complaint states the proposed class contains more than 100 people, with at least one from another state, and the total case value exceeds $5 million.

The complaint details the alleged "structural unfairness" in the tariff refund process, where importers of record can obtain tariff refunds while consumers often bear tariff costs through higher prices. "Thousands of companies—including Costco—have filed lawsuits in the Court of International Trade actively seeking refunds of their entire IEEPA tariff bills. If successful, under federal trade law, they have no obligation to return the money to customers," the complaint states. "This lawsuit aims to prevent Costco, the world's third-largest retailer, from double profiting."

Lawmakers' Attention

The lawsuit echoes concerns raised by Democratic lawmakers last month. In a February 24 letter to President Donald Trump, Senators Elizabeth Warren (D-MA), Cory Booker (D-NJ), and Peter Welch (D-VT) called for a plan to return the $175 billion in "illegally collected" tariff funds to consumers and small businesses.

The letter stated: "Any refund from the federal government should be returned to the millions of Americans and small businesses who were illegally defrauded of their hard-earned money."

George Zelcs, a lawyer at Chicago's Korein Tillery law firm representing Stockov in the lawsuit, declined to comment.