Some people may love to abuse Costco's generous returns policy, but it's a genius business decision

• Costco offers its members unlimited returns on most items.
• The policy, unsurprisingly, has meant some people have donated particularly old or gross items.
• Despite some abusing the policy, it keeps on working for Costco.

A big perk of a Costco membership is the unlimited returns offered by the company.

Customers can return almost anything without a time limit. Certain exceptions, like electronic goods, have a 90-day cap, and diamonds must be returned within 48 hours. Meanwhile, cigarettes, alcohol, gold bars, and silver coins aren't eligible for return.

Aside from the handful of exceptions, customers have a 100% satisfaction guarantee.

But it's a policy ripe that's for abuse.

The internet is awash with examples of people using the policy outside its original intention and returning particularly old and/or gross items.

Wildest returns

Earlier this year, a photo that appeared to show someone returning a TV from 2002 to a Costco store started to circulate on Reddit, and once again drew attention to Costco's liberal returns policy.

While the returns policy on electronic goods is now 90 days, until 2007, Costco members had an unlimited returns policy on electronic goods — excluding personal computers.

It's far from the only example of Costco returns.

A woman went viral on TikTok in January after she said that she successfully returned a 2.5-year-old couch to the store without a receipt.

Yuliana Martinez and Louis Orellana also previously told Business Insider that they got a full $200 refund on their two-year-old used Costco mattress.

It's up to the discretion of Costco store managers whether they accept a return — and many of them have their own stories to tell about the wildest returns.

Costco employees who have previously spoken to BI have shared that some customers have brought back "half-eaten food," that they said wasn't up to par.

Another Costco employee previously told BI that a woman had returned two dirty, five-year-old toilets to the warehouse.

Other retailers have cracked down on returns

It seems like a way to hemorrhage money to refund customers half-eaten food, or well-worn pieces of furniture, but Costco continues to offer the policy while others have abandoned it.

L.L. Bean used to offer a legendary lifetime returns policy but switched to a one-year return limit in 2018 after some customers abused it.

Even online retailers are cracking down on returns.

People have grown accustomed to using free shipping and no-cost returns to try on a range of different sizes and styles in the comfort of their own homes, at the retailer's expense. However, some have taken it to the extreme and have been barred from online shopping by various retailers for returning thousands of pounds of goods.

So why does Costco still offer the policy?

Costco's business model relies on maintaining customer loyalty, and unlimited returns help.

"I think it is one of the underpinnings of the company's success. Costco likes to go further for members, and this is one of the services that helps demonstrate that, " Neil Saunders, managing director of GlobalData Retail, told BI.

"Some people always abuse returns policies. However, most customers don't. And that's why the math stacks up for Costco," Saunders added.

Katherine Black, a partner at global strategy and management consulting firm Kearney, told BI that it also encourages customers to splash out on big-ticket items and make impulse purchases, knowing that they can return them.

Demonstrating trust in its members is a core part of maintaining customers' relationships with Costco. The club model "inspires loyalty, affinity, and accountability," Gina Logan, principal analyst at Kantar, told BI.

"By providing essentially infinite returns, it's keeping that promise to take care of its members, ensuring that they renew, and adding to the value of the upfront cost of the annual fee," she said.

Even the crazy returns themselves help to bolster Costco's brand.

"The viral posts and articles about outrageous returns don't do anything to hurt Costco. In fact, they just add to the legend," said Logan.