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The Biggest Scandals To Ever Hit Costco

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05:34   |   May 22, 2019

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The Biggest Scandals To Ever Hit Costco
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  • Costco has had some pretty large-scale scandals in the headlines.
  • They've centered around everything from their pharmacy to their hot dogs, but their customers
  • have mostly stuck with them through it all.
  • These are the biggest scandals Costco has endured.
  • In 2013, jewelry giant Tiffany & Co. filed a lawsuit against Costco.
  • According to the suit, Costco's in-store signage identified their rings as "Tiffany", and misled
  • customers into thinking they were buying authentic Tiffany jewelry.
  • The problem?
  • Tiffany had no agreement whatsoever with Costco, and the lower-priced rings weren't actually
  • from Tiffany.
  • Costco claimed they were simply using the term "Tiffany" to refer to the style of the
  • ring and not the brand.
  • They never branded any rings, bags, or boxes with the Tiffany name or logo, didn't use
  • the well-known blue packaging, and didn't use the name on their web site.
  • Tiffany used that all against them, arguing that made it easier for them to slip under
  • the radar.
  • In 2015, CNN reported that a judge had ruled Costco was guilty of, quote, "trademark infringement
  • and trademark counterfeiting."
  • They were hit with a massive fine of more than $19 million, which Bloomberg reported
  • they were appealing.
  • Costco faced an uphill battle, because it's been declared that their signage and their
  • imitation of Tiffany styles represented, quote, "a bad faith intent to deceive customers,"
  • which is never good for a business.
  • "There's the ring.”
  • “Holy s---!
  • Is that real?"
  • "Yep.
  • You know what they say, three years' salary."
  • The roots of this one go back to 2014, when The Guardian launched an investigation into
  • the shrimping industry in Thailand.
  • The six-month investigation uncovered some dark things about CP Foods, who supplied shrimp
  • not only to Costco, but also to Walmart and several major European chains.
  • Former slaves had testified that when they paid brokers to find them work, they were
  • instead sold to boat captains who then passed them on to companies that supplied the CP
  • Foods food chain.
  • There were reports that they were held captive at sea for years, witnessed beatings and executions,
  • and were forced to work 20-hour shifts while fueled up on meth.
  • Some were working on ships that farmed so-called "trash fish," which were then fed to the farmed
  • shrimp that eventually ended up on grocery store shelves.
  • Three law firms in California filed a lawsuit against Costco to block the sale of shrimp
  • connected with the Asian slave trade, but the 2015 lawsuit was ultimately dismissed
  • in 2017.
  • Reuters reported that it was ruled,
  • "[The suit] failed to establish that the world's second largest retail chain was bound to inform
  • customers that modern-day slavery could be part of its supply chain."
  • First, a little background on how pharmacies work.
  • When it comes to generic drugs, some chain pharmacies will demand payments from drug
  • companies for stocking their particular brand of medication.
  • They're called "pharmacy rebates," and it ultimately means people pay more for the medicine
  • they need.
  • Thanks to these rebates, Canadians pay some of the highest drug prices in the world for
  • generics.
  • But in 2013, the province of Ontario made the practice illegal.
  • Only, one salesman from Ranbaxy Pharmaceuticals says the practice didn't stop at Costco.
  • His accusations and his recorded phone call with a Costco executive who said Ranbaxy wasn't
  • paying them enough to put their drugs on its shelves triggered a major investigation, says
  • CBC.
  • Costco was accused of receiving around $1.2 million Canadian dollars in illegal payments
  • in a kickback scheme.
  • The two Costco pharmacy execs named were fined by the Ontario College of Pharmacists, and
  • even as the accusations turned into a provincial investigation, Costco denied any wrongdoing.
  • They issued a formal statement saying they decided to stop giving kickbacks to pharmaceutical
  • companies of their own accord after an internal investigation, but they were still fined over
  • $7 million Canadian dollars in February 2019.
  • Hillandale Farms was supplying Costco and other retailers with a huge percentage of
  • their eggs, and when grisly undercover footage was released in June 2015, the public was
  • shocked.
  • The footage was shot by an investigator for the Humane Society of the United States.
  • He spent three weeks working at the farms as a day laborer, and found the farm's chickens
  • were living in horrible conditions.
  • Cages were dirty, dead chickens dropped to the ground and stayed there so long they were
  • mummified, and live chickens had little to no room to even move.
  • Hillandale disputed the footage, saying it didn't show the norm and claiming the investigator
  • was documenting the very conditions he had been hired to clean up.
  • While the Humane Society did admit the video was simply a small snapshot, they also added
  • there were a ton of red flags that more was going on at the facility than Hillandale was
  • saying.
  • As for Costco, they felt the pressure, and announced in December of that year that they
  • would carry only cage-free eggs.
  • It's no secret that Costco customers love their rotisserie chickens and their hot dogs,
  • so when the corporation announced they were going to be getting rid of their Polish dog
  • in 2018, social media was not having any of that nonsense… especially when it was announced
  • they were replacing the favorite with things like plant-based protein salads and organic
  • burgers.
  • "'I'd rather have an acai bowl than a Polish dog', said no one with functioning taste buds."
  • Even though CFO Richard Galanti assured The Seattle Times that the original all-beef hot
  • dog combo wasn't going away, it didn't really do much to comfort some people.
  • Instead, devoted fans created the hashtag SaveThePolishDog in a push to use social media
  • for good, rather than evil.
  • Alas, it didn't work, but there is some good news: the Polish dog is still being served
  • in Canadian locations.
  • Time to start planning your next vacation.
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Description

Costco has had some pretty large-scale scandals in the headlines. They've centered around everything from their pharmacy to their hot dogs, but their customers have mostly stuck with them through it all. These are the biggest scandals Costco has endured.

In 2013, jewelry giant Tiffany & Co. filed a lawsuit against Costco. According to the suit, Costco's in-store signage identified their rings as "Tiffany", and misled customers into thinking they were buying authentic Tiffany jewelry. The problem? Tiffany had no agreement whatsoever with Costco, and the lower-priced rings weren't actually from Tiffany.

Costco claimed they were simply using the term "Tiffany" to refer to the style of the ring and not the brand. They never branded any rings, bags, or boxes with the Tiffany name or logo, didn't use the well-known blue packaging, and didn't use the name on their web site. Tiffany used that all against them, arguing that made it easier for them to slip under the radar.

In 2015, CNN reported that a judge had ruled Costco was guilty of, quote, "trademark infringement and trademark counterfeiting." They were hit with a massive fine of more than $19 million, which Bloomberg reported they were appealing. Costco faced an uphill battle, because it's been declared that their signage and their imitation of Tiffany styles represented, quote, "a bad faith intent to deceive customers," which is never good for a business.

Watch the video to learn about the biggest scandals to ever hit Costco!

Selling fake Tiffany rings | #
Shrimp and slave labor | #
The drug company payments scandal | #
Egg conditions at a Costco supplier | #
| #