Lawsuit alleges Costco misled members about ethically sourced products

Costco is known for bulk, low-price items, but a new lawsuit in Oregon alleges Costco’s cost savings come at the price of ethical labor practices. 

A class action suit filed against the company on Thursday claims Costco, despite claiming to prioritize safe and ethical labor practices, sells “hundreds” of products that use child labor or forced labor practices. The class, a group of Costco members living in Oregon, are demanding $200 payouts for each member.

The suit underscores Costco’s ESG promises it makes to members, including prohibiting human rights abuses in its supply chain and its Kirkland Signature products and adds to a growing list class action lawsuits the company is fielding.

“Our goal is to follow sustainable sourcing policies,” according to a 2023 Costco blog penned by Sheri Flies, Costco’s vice president of global sustainability and compliance. “Ideally, if everything is done right, the people, animals and the planet are not negatively affected by the goods that come into your house and to your table.” 

The suit alleges that Costco partners with suppliers alleged worker exploitation or child labor to make its Costco-branded Kirkland signature products. Plaintiffs believe this practice allows Costco “to launder tainted products customers would otherwise shun,” according to the suit.

Some of the Costco-sold and -produced items in question include chocolate, cashews, gold, coconut water and frozen seafood. The lawsuit did not name all of the alleged “hundreds” of products connected to unethical labor practices.

Costco did not immediately respond to The Oregonian’s request for comment on Thursday nor The Times Square Investment Journal’s request for comment on Monday.

This is the third class action lawsuit in recent years to be filed against Costco about unethical labor practices but the first about Costco’s supply chain all of which are still in litigation. The two prior suits centered on unfair labor practices for employees in California, according to the company’s latest 10K filing from 2025. 

In general, consumer sentiment toward Costco and its low prices has remained positive, despite the company grappling with rising merchandise costs. The company announced it would spend its $184 million from tariff refunds to reduce prices for shoppers, which Redditors responded positively to. 

Costco reported $2.9 billion in net income in its latest earnings, filed Sept. 24, or $6.75 per share, up 14% from the same quarter one year prior. As of Friday close, the company’s stock traded at $920.65, up 0.5% from the year prior.