Nothing in Life Is Free (Especially Not ‘Free Shipping’)

In Zaimi v. Costco Wholesale Corporation, plaintiff Christina Zaimi purchased a sectional couch online from Costco for $2,349.99. At checkout, “Shipping & Handling” was listed as “$0.00.” The catch? The exact same couch was available in Costco’s brick-and-mortar warehouse for $2,099.99, a $250 difference that, Zaimi alleged, was the shipping cost hiding in plain sight. Costco even admitted on a separate customer service web page that “Costco.com prices take into account shipping and handling fees not applicable to warehouse purchases.” But that disclosure lived on a different page from the listing or checkout screen, and Zaimi alleged she never saw it. 

Zaimi sued on behalf of a proposed class, bringing nine separate legal claims. Costco asked the court to throw out every one of them. It lost across the board. 

$0.00 Does Not Mean Free

The deception theory at the heart of this case is straightforward: Costco advertised “Shipping & Handling: $0.00” on its online listings, but the online price for the very same product was significantly higher than the in-store price. In Zaimi’s case, she paid $2,349.99 online for a couch that cost $2,099.99 in a Costco warehouse. The difference? $250, which, Zaimi alleged, was the shipping cost rolled into the sticker price. In other words, the shipping was not free at all. Costco just moved the charge from one line item to another and told consumers they were paying nothing for it.

Zaimi brought claims under four consumer protection and false advertising laws: California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA), plus Washington’s Consumer Protection Act (CPA). All four use the “reasonable consumer” test, which asks whether a significant portion of ordinary consumers could be misled. As the court noted, when that test applies, it is “rare” for a case to be dismissed early.

Costco’s primary defense was that it disclosed the pricing difference. The online listing included fine print in “light grey font,” noting that delivery was “included” in the price, and that “prices may vary.” On a separate customer service page, Costco stated that online prices “take into account shipping and handling fees not applicable to warehouse purchases.” But the court found these disclaimers insufficient to defeat the claim. The listing itself never told consumers that prices would be lower in-store, only that they “may vary.” And the more explicit admission about embedded shipping costs lived on a different page entirely, one the plaintiff alleged she never saw. As Judge John H. Chun put it, disclaimers buried elsewhere on the website “do not necessarily cure the deception.”

The court also credited the allegation that today’s consumers “expect free shipping” given how common online shopping has become, even for big-ticket items like furniture, reinforcing the theory that a bold “$0.00” on the checkout screen would mislead ordinary shoppers. On the UCL, the claim survived on all three of its independent grounds: deceptive, unlawful, and unfair conduct. Zaimi only needed to clear one of those hurdles. She cleared all three. And under the Washington CPA, the court rejected Costco’s argument that Zaimi was not harmed because she “received the value that she paid for,” holding that tricking a consumer into spending money she otherwise would not have spent is, by itself, a real injury.

It Does Not Stop at Advertising

The false advertising claims were not the only ones to survive. The court also denied dismissal of Zaimi’s breach of contract, breach of warranty, intentional and negligent misrepresentation, and unjust enrichment claims. Each of these claims traces back to the same core conduct: advertising “$0.00” shipping while embedding that cost in a higher online price. The breadth of surviving claims underscores that deceptive shipping practices can expose retailers to liability well beyond the advertising statutes themselves.

The Bottom Line

This case is a warning shot for any business that advertises “free” shipping while charging more for products online than in-store. The core lesson: if you tell consumers shipping is $0.00 but the cost is baked into the price, a court may call that false advertising, and the exposure extends far beyond advertising statutes alone.

Retailers should audit their online pricing and shipping representations now. Telling consumers that “Shipping & Handling” costs “$0.00” while inflating the online price to cover that very cost is exactly the kind of practice that courts will let juries evaluate under the reasonable consumer standard. Disclaimers on separate pages, in fine print, or in vague language like “prices may vary” will not save you. What matters is the message consumers see at the point of purchase and a checkout screen that says “$0.00” sends a clear one.

For any retailer selling the same products online and in-store, this decision is a reminder: if there is a price gap between channels and you are advertising free shipping on the higher-priced channel, you may have a problem. Transparent, consistent pricing is not just good business practice. After Zaimi, it may be a legal imperative.