How Costco resells items returned under its satisfaction guarantee policy

Costco is famous for its liberal return policy, which allows shoppers to return purchases with no time limits, — including even memberships, which can be canceled at will.

But what happens to the unwanted stuff we dump back on the beloved buyers’ club?

A new report from Slashgear reveals just how much Costco has to go through to unload these items — which can clog company warehouses.

Costco is famously liberal about returns — leaving the big-box chain with a mountain of goods to sort through and resell. UCG/Universal Images Group via Getty Images

The story goes into into detail about Costco’s wholesale liquidation auction program — which the superstore uses to get rid of the many returns that cannot be resold, for one reason or another.

According to the article, Costco works with a company called B-Stock, which also helps major brands like Target and Walmart unload unwanted inventory.

Via B-Stock, they sell “everything from apparel to electronics, major appliances, furniture, toys, food, and sporting goods,” the story explained.

And it’s not just so-called “open-box” stuff you’ll find at B-Stock auctions — overstocked merchandise is available as well.

There are, however, strict guidelines for those wanting to participate in the resales, according to the report.

To participate, U.S. buyers must provide valid state-specific resale certificates, while International buyers must provide proof of business. In other words, it’s not for the typical consumer walking in off the street.

Liquidation auctions are how Costco gets rid of a lot of the returned stuff it can’t restock. BLOOMBERG NEWS

Items in Costco’s auctions are screened by Costco’s Returns Depot — but they’re not tested, reportedly, to see if they work, but rather only graded visually.

Items in their original packaging receive an A grade, while damaged items or items with missing parts receive a D grade.

And there’s another potential downside — according to the article, the items bought at Costco’s liquidation sales cannot be resold outside of a 5-mile radius from where it was originally sold.

Despite their so-called “risk free” return branding, Costco’s patience apparently has a limit.

The company does track return history — and can flag shoppers they suspect of abusing the generous policy, Consumer Affairs reports.

Costco can revoke memberships for excessive returns, but the exact amount that gets someone banned is unknown.

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According to the outlet, workers often complain about customers returning mattresses years after purchasing, returning patio furniture after summer months, returning dead Christmas trees after the holidays, and large TVs the day after the Super Bowl.

The retailer’s return policy does not cover most electronics, with gadgets like TVs, laptops, tablets, cell phones, smart watches, projectors, and major appliances all falling under a 90-day return window.

Certain items, like airline and event tickets, gift cards and shop cards, precious metals like gold bars and silver coins, cigarettes and alcohol (in some states), and custom-installed products are not returnable.